Financial characteristics, human development index, and performance: a study of local governments in Indonesia

Abstract

This study aims to examine whether the financial characteristics and human development index (HDI) are associated with the performance of local governments administration in Indonesia. The sample consists of 385 local governments classifying expenditures into operating and capital expenditures (Sample 1) and 53 local governments classified expenditures into direct and indirect expenditures (Sample 2). Regression result for Sample 1 indicate that special allocation funds (dana alokasi khusus, DAK) have a positive relationship with performance while general allocation funds (dana alokasi umum, DAU) and land expenditure are negatively related to performance. For Sample 2, revenue risk and DAU are negatively related to performance, whereas revenue sharing funds (dana bagi hasil, DBH) have a positive relationship with performance. Audit opinion and human development index are positively related to performance either for Sample 1 or Sample 2. These findings suggest that financial characteristics and human development index can be used as a consideration in determining financial policy and evaluation of local governments.

Human Development Index and Local Government Performance: Evidence from Central Java Province, Indonesia

“…This result support the expectation that HDI support the local governent performance. The result of this study also support the previous study who found the HDI level improve the local government performance [10], reduce the economic inequality [6], and provide sources for economic growth [1][2][3]. This result also in line with Al-Nasser and Al Hallaq [12] who found the negative relationship between poverty and human development index in Jordan.…”

“…The result of the previous study shows that HDI have positive effect on the local government performance. Further, Saputra, and Ardila [10] focus on the effect of local government financial characteristics and HDI to the level of local government performance. They found that both financial characteristics and HDI have significant effect on local government performance.…”

The Effect of Financial Performance on Capital Expenditure, Economic Growth, Human Development Index, and Poverty

“…First, although references (Wang et al, 2021) show a threshold effect in poverty alleviation through investment in human capital in the health sector, no studies have specifically examined this threshold in other contexts or other geographic areas. Second, although (Saputra et al, 2018) found a positive relationship between the effectiveness of budgets and special allocation funds with the proportion of capital expenditure as well as a positive relationship between regional financial independence and the human development index in Indonesia, there has been no study that comprehensively analyzes other economic characteristics and how they interact with these variables.…”

Does Public Attention Impact Local Government Performance? An Empirical Study in Indonesia

“…The dependent variable of the study is public service quality while the independent variable is public attention. (Sutaryo et al, 2022;Sutopo et al, 2018) the relationship between variables by doing a correlation test. In order to evaluate the hypothesis, the primary analysis method employed is panel data regression analysis.…”

“…Ever since the 1998 reforms, the Indonesian government made significant amendments to the constitution to regulate equal distribution of power through decentralization policy (Diprose et al, 2019). A set of laws are issued to regulate local government that started from Vol 13, Issue 4, (2023) E-ISSN: 2225-8329 the first stage UU/22/1999 1 to prepare for the implementation of decentralization for two years, the second stage is regulated in UU/32/2004 2 and the third stage is UU/23/2014 3 (Rini & Damiati, 2017;Sutopo et al, 2018). The existence of these regulations were meant to strengthen local autonomy so that it can give local governments more authority to manage resources and meet the needs of local people (Holzhacker et al, 2016;Mubarok et al, 2022).…”