Factors Affecting the Local Governments Financial Performance

Oktaviani, Regita; Wijaya, Satria Yudhia; Ermawati, Ermawati

doi:10.22610/jebs.v12i4(j).3063

Cited by 2 publications

(6 citation statements)

References 9 publications

(14 reference statements)

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“…The study findings are consistent with the agency theory, which argues that LG trusts residents to manage regional wealth for the benefit of the entire community. The findings of this study are consistent with a number of earlier studies, including those by Aswar ( 2019), Amalina and Sumardjo (2020), Samadara et al ( 2021), Oktaviani et al (2020), and Simanullang (2013), which found a strong correlation between regional wealth as measured by PAD and LG financial performance. Furthermore, it was discovered that the intergovernmental revenue had a t-value > ttable, 4.768 > 1.648, and a significance level of 0.000 0.05.…”

Section: Nosupporting

confidence: 92%

“…The study findings are consistent with the stakeholder theory, which claims that when a stakeholder-in this case, the community represented by the DPRD-grants the LG manager full authority to oversee and administer the government, it functions at its best. The findings of this analysis are consistent with a number of earlier studies, particularly those by Oktaviani et al (2020) and Mulyani and Wibowo (2017), which found that capital expenditure had a considerable impact on LG's financial performance. The moderating variable, political monitoring, which modifies the association between regional wealth and LG financial performance, has a significant level of 0.001 to 0.05 and a t-value greater than the t-table, or 3.403 > 1.648.…”

Section: Nosupporting

confidence: 90%

“…Due to the high realization of capital expenditures, which indicates a significant amount of infrastructure development, LG is under pressure to deliver high-quality services to the public and maintain financial transparency as a measure of its effectiveness. Capital spending has a considerable impact on LG's financial performance, according to earlier studies by Oktaviani et al (2020) and Mulyani and Wibowo (2017). H3: Capital expenditure affects the financial performance of LG.…”

Section: Capital Expenditure and Local Government Financial Performan...mentioning

confidence: 87%

“…According to agency theory, LG needs to be transparent in its financial reporting to build public trust in regional financial management. The impact of PAD on the financial performance of LG has been studied previously by Aswar (2019), Amalina and Sumardjo (2020), Samadara et al ( 2021), Oktaviani et al (2020), andSimanullang (2013). Results from earlier studies indicate that PAD has an impact on how financially successful LG.…”

Section: Regional Wealth and Local Government Financial Performancementioning

confidence: 94%

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Local Government Financial Performance: The Role of Political Monitoring

Putri

Aswar²

2022

JEBS

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This study intends to investigate and demonstrate the impact of local government financial performance as influenced by political oversight, regional wealth, intergovernmental revenue, and capital spending. In Indonesia in 2019, the district/city local governments were the subject of this study. The Report on Local Government Finances (LKPD) accessible at the Audit Board of the Republic of Indonesia was used as secondary data (BPK RI). The data used in this study included 491 data samples chosen using the purposive selection approach from 507 districts/cities across Indonesia. The analytical method used in this study was path analysis with Smart PLS software and a significance level of 5%. Structural Equation Modeling was used for data analysis (SEM). The findings of this investigation showed that regional wealth, intergovernmental revenue, and capital expenditures have an impact on local government's financial performance. Political supervision, however, does not mitigate the association between intergovernmental revenues and capital expenditures on the financial performance of local governments, which reduces the relationship between regional wealth and local government financial performance. The results of this study are anticipated to be used as source material for studies on the factors affecting local government financial performance and to help local governments by providing information on the monitoring activities carried out by numerous Regional People's Representative Council (DPRD) members. As a result, local governments will be encouraged to increase legislative oversight to improve their financial performance.

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Section: Nosupporting

confidence: 92%

Section: Nosupporting

confidence: 90%

Section: Capital Expenditure and Local Government Financial Performan...mentioning

confidence: 87%

Section: Regional Wealth and Local Government Financial Performancementioning

confidence: 94%

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Local Government Financial Performance: The Role of Political Monitoring

Putri

Aswar²

2022

JEBS

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“…A high independence ratio, good efficiency in the use of resources, and appropriate fiscal decentralisation can result in an increase in capital expenditure, which has a positive impact on economic growth. Studies conducted [15,16] have explored various factors that influence local government financial performance, including the impact of capital expenditure. Research [15,16] shows a positive relationship between financial performance and capital expenditure.…”

Section: Relationship Between Financial Performance and Capital Expen...mentioning

confidence: 99%

Increasing Sustainable Economic Growth: Financial Performance and Capital Expenditures

Zein,

Muhtarom,

Septiani

2024

Preprint

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The financial performance of local governments is closely related to the economic growth of a region. Strong financial performance provides a solid foundation for sustainable economic development. This study analyses the relationship between local government financial performance, capital expenditure, and sustainable economic growth in Banten Province. A quantitative approach was employed, using secondary data from Regional Revenue and Expenditure Budgets and economic growth statistics. Purposive sampling was utilised, and data analysis was conducted using Path Analysis. The findings reveal that several financial ratio variables significantly impact economic growth directly and indirectly through capital expenditure as a mediating variable. Directly, the independence ratio, effectiveness ratio, efficiency ratio, fiscal decentralisation ratio, dependency ratio, and capital expenditure significantly influence economic growth. The independence and effectiveness ratios have a positive impact, indicating that improvements in these variables directly foster economic growth. However, the efficiency and fiscal decentralisation ratios have a negative impact, suggesting that increases in these variables may reduce economic growth. Indirectly, through capital expenditure, the independence, effectiveness, dependency, and compatibility ratios significantly affect economic growth, with the independence ratio being the most dominant. Conversely, the fiscal decentralisation and efficiency ratios do not show significant indirect effects, indicating that capital expenditure is not an effective mediator for these variables.

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Factors Affecting the Local Governments Financial Performance

Cited by 2 publications

References 9 publications

Local Government Financial Performance: The Role of Political Monitoring

Local Government Financial Performance: The Role of Political Monitoring

Increasing Sustainable Economic Growth: Financial Performance and Capital Expenditures

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