Examining the effect of financial control mechanisms on the financial sustainability of selected local government authorities in Tanzania: the moderating effect of good governance

Abstract

This study aimed at examining the effect of financial control mechanisms on the financial sustainability of selected Local Government Authorities in Tanzania, examining good governance as a moderating variable in knowledge advancement. The direction of the study was given by the Institutional and the Agency theories. Explanatory research design was employed. The gathered data was subjected to inferential and descriptive analysis techniques. Data was collected through the use of questionnaire. Structural Equation Modelling was used for data analysis. The results revealed that financial control has positive and significant relationships with financial sustainability. It suggests that effective financial control is critical for ensuring resources availability and efficient utilization, thereby enhancing local government operations’ sustainability. Multi-group analysis confirmed positive moderation of good governance of a path of financial control and financial sustainability. The practical implication of the findings is that, institutions that promote effective financial control contribute to their long-term financial sustainability, and that prioritizing good governance reforms in local government leads to better financial outcomes.