Regional and institutional aspects of local public finances are studied in this paper. Mexican Northern Border
municipalities have experienced economic and populational growth rates that are much higher than other Mexican regions.
These heterogenous laws of motion result in higher demand for public services and infrastructure. The different institutional
framework, both fiscal and legal, faced by municipalities in every Mexican State might impact the fiscal behavior of local
governments. This article studies whether border municipalities are more financially dependent on central authorities due to the
high demand for public services in their jurisdictions and their inability to obtain sufficient funding. We estimate several
econometric models for the more representative 300 Mexican municipalities in the year 2000. We find a strong and negative
relationship between income and financial dependence, as expected. We also uncover that institutional and regional factors
should not be omitted in the model specifications. Classic statistical theory, based on the estimations, finally suggests that the
border Mexican municipalities of Ciudad Juárez and Puerto Peñasco have systematically lower financial dependence than
others. There is not, however, a general rule regarding border municipalities and financial dependence.