Mediating Effect of Capital Expenditure on the Effect of Revenues, Allocation Fund, and Tax/Nontax Sharing on Economic Growth (Empirical Study of Regencies in Bengkulu Province Period of 2009-2015)

Elsivera Elsivera,Willy Abdillah

doi:10.47312/ambr.v2i02.104

Abstract

This research examines the mediating effect of capital expenditure on the relationship between regional revenues (PAD), general allocation fund (DAU), specific allocation fund (DAK), and tax sharing fund/non tax sharing (DBH) on the economic growth. Secondary data were collected from 10 regencies in Bengkulu Province for the period of 2009 to 2015. This research used panel data analysis. The results showed that capital expenditure did not mediate the relationship between regional generated revenues, general allocation fund, specific allocation fund, and tax sharing fund/non tax sharing to economic growth. Meanwhile, general allocation fund have positif effect on economic growth. Regional generated revenues and specific allocation fund have negative effect on economic growth, regional revenues and specific allocation fund also have positive effect on capital expenditure. Implication for stakeholders and further research are discussed. Keywords: Capital Expenditure, Economic Growth, General Allocation Fund, Regional Generated Revenues, , Specific Allocation Fund, Tax Sharing Fund /Non Tax Sharing

Highlights

IntroductionReform of local financial management in Indonesia in the form of fiscal decentralization, aims to encourage the realization of good governance
Reform of local financial management in Indonesia in the form of fiscal decentralization, aims to encourage the realization of good governance. It is governed by Law Number 2 Year 2015 and Law Number 33 Year 2004, which explains the objectives of fiscal decentralization within the framework of the implementation of regional financial management in Indonesia is for fiscal sustainability, corrects vertical imbalance, corrects horizontal imbalance, reduces dependency regional levels to the center, increasing accountability, effectiveness and efficiency in the framework of improving regional performance, improving the quality of public services, and increasing public participation in decision making in the public sector
The DAK in this study is the realization of a special allocation fund (DAK) which is the amount of DAK received by the central government to the district / municipal governments in Bengkulu Province derived from APBN revenues and allocated for the purpose of assisting in financing specific activities which are regional and appropriate with national priorities measured in millions of rupiah

Summary

Introduction

Reform of local financial management in Indonesia in the form of fiscal decentralization, aims to encourage the realization of good governance. Fiscal decentralization is a central government financial management instrument in distributing resources in the form of budgets to regions to realize public services which in turn leads to prosperity. In line with the objective of fiscal decentralization, transfers aim to reduce horizontal financial inequality between regions, reduce central and regional vertical gaps, address the effects of public service delivery among regions, and create stability of economic activity in the regions

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