The optimal performance of municipalities, as one of the most important local public institutions, plays a fundamental role in urban development, improving the quality of public services, and increasing citizen satisfaction. In this regard, the method of financial resource provision and risk management associated with it are key factors influencing municipal performance. Dependence on unstable sources, inappropriate use of financing instruments, and weaknesses in risk management can seriously challenge the financial and operational performance of municipalities. Accordingly, the main objective of this study is to examine the effect of financing methods on municipal performance with the moderating role of risk management.
This research is applied in purpose and descriptive–survey in method, conducted with an inferential approach. The statistical population includes all official, contractual, and temporary employees of the municipality (totaling 15,000 individuals). Using Cochran’s formula for limited populations, a sample size of 375 participants was determined and selected through simple random sampling. The data collection tool was a standard questionnaire whose validity was confirmed through content and construct validity, and reliability through Cronbach’s alpha coefficient. Data analysis was performed using structural equation modeling and SmartPLS software.
The findings revealed that financing methods have a positive and significant effect on municipal performance. Furthermore, financing through cash flow showed a stronger effect on performance compared to borrowing. In addition, risk management had a positive and significant effect on municipal performance and, as a moderating variable, strengthened the relationship between financing methods and performance. In other words, employing diverse financing approaches, when accompanied by an efficient risk management system, can lead to improved financial, operational, and managerial municipal performance. Overall, the results indicate that municipal performance is not solely dependent on the amount of financial resources, but the way risks related to these resources are managed plays a decisive role in their effectiveness. The findings can serve as a useful guide for urban managers and policymakers in designing sustainable financing systems and enhancing municipal performance.