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The purpose of this paper was to identify the internal determinants of financial self-sufficiency of local government units, as illustrated by the example of Polish municipalities of the Wielkopolskie voivodeship, with the use of taxonomic methods and the ordered logit regression model. The first step of the proposed approach is to assess financial self-sufficiency of the municipalities using taxonomic methods, in order to subsequently model it with econometric techniques. In the first phase, the local government units’ (LGU) financial self-sufficiency was assessed with positional TOPSIS (Technique for Order Preference by Similarity to an Ideal Solution). The results of this phase, that is, municipalities were grouped into classes by financial selfsufficiency level, were assumed to be the baseline. Afterwards, the ordered logit regression model was used. The estimated model allowed us to specify the significance (strength and direction) of selected socio-economic development factors for the financial self-sufficency level of administrative units under consideration. The empirical basis for this study was statistical data for 2013 delivered by the Local Data Bank of the Central Statistical Office in Poland. The study confirmed that the size of local economic operators and the number of hotel beds stimulated the improvement of financial self-sufficiency levels of municipalities in the Wielkopolskie voivodeship, while the unemployment rate and the share of rural population in the total population were restraining factors.

The application of taxonomic methods and ordered logit model in the assessment of financial self-sufficiency of local administrative units