The spillover effect of Financial Decentralization on Efficiency of public Transprt Delivery in the Provinces of Iran during 2006-2016: Using Spatial Econometrics

Properly operated public transportation increases the efficiency, economic growth and overall development of a country; Therefore, improving the quality of the transportation system seems necessary. In the past decades, various studies have been done on the design of the public transportation system due to its practical importance. How specific policies, including decentralization, can determine the effectiveness and efficiency of public transportation services. Accordingly, the purpose of this study is to investigate the effect of financial decentralization indicators on the efficiency of providing public transportation services in the provinces of Iran by spatial econometric method during the years 1385-1387. The present study is a two-stage approach: in the first stage, efficiency coefficients in the transportation sector are estimated through stochastic border analysis. In the second step, the space panel analysis method is used to investigate the effect of financial decentralization on the estimated efficiency coefficients. The results show that the efficiency of public transportation system in most provinces of Iran is less than 20%. Other findings show that there is a non-linear relationship between financial decentralization and the efficiency of public transportation services. In other words, over-optimal financial decentralization will have the opposite effect on the efficiency of transportation services. In fact, the initial levels of financial decentralization have a positive effect on efficiency, but after exceeding the maximum point, increasing financial decentralization leads to a decrease in the efficiency of public transport services. Also, the ratio of urbanization, relative population density and per capita income have a positive and significant relationship with the efficiency of transportation services.Keywords: Financial Decentralization ,Efficiency of public Transprt , Spatial Econometrics