Factors Affecting the Local Governments Financial Performance

Regita Oktaviani,Ermawati ,Satria Yudhia Wijaya

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

Abstract

This study aims to test and prove the relationship of local government financial performance with fiscal balance transfer, local own-source revenue, local government size, and capital expenditure. The study uses samples from District/City Local Governments in Sulawesi Island for the years 2016-2018. The samples were collected using the census sampling method, for a total of 243 samples in District/City Local Governments in Sulawesi Island. In this analysis, the hypothesis testing is performed using SPSS by the multiple linear regression method. The result of this study shows that fiscal balance transfer has a negative impact on the local government financial performance, local own-source revenue has an impact towards the local government financial performance, local government size does not have an effect towards the local government financial performance, and capital expenditure has an effect towards the local government financial performance. This study is expected to contribute to local governments by providing recommendations to improve the local government financial performance.

Highlights

Improvement of performance must be done, by both private and public organizations
The independent variables in this study are: fiscal balance transfer measured using the total realization of fiscal balance transfer, local own-source revenue measured using the total realization of local own-source revenue, size of local government measured using the total revenue in comparison to the number of citizens, and capital expenditure, measured using the total realization of capital expenditure, based on the study conducted by (Mulyani & Wibowo, 2017)
The standard deviation for the independent variables, fiscal balance transfer is 0.29352>0, local own-source revenue is 0.87545>0, local government size is 0.37500>0, and capital expenditure is 0.34294>0, it can be concluded that all the data in this study is variative or not uniform

Summary

Introduction

Improvement of performance must be done, by both private and public organizations. The performance of private organizations differs from the public sector, in which majority of performance measurement is based on revenue, and the public sector does not use revenue as a measurement for the success of an organization, since its main objective is not to generate revenue, but to improve the welfare of the people, as well as public services. According to Mardiasmo (2009), public sector performance can be measured using value for money, which consists of economy, efficiency, and effectivity. The examination of performance is aimed to assess the 3E aspects (economy, efficiency, and effectivity). The performance examination result report of the BPK concludes that performance is still not generally effective. In Districts/Cities in Sulawesi Island, the BPK implemented the following examinations related to performance examination in Districts/Cities from 6 provinces

Objectives

Methods

Results

Conclusion