Abstract
This study aims to obtain empirical evidence about the balance funds and regional expenditure on economic growth with regional financial performance as a mediating variable. The results showed that the balance fund did not affect the financial performance of the region with a result of 0.054 indicating that the balance fund received by the regional government increased or decreased could not affect the regional financial performance. Regional expenditure has a negative effect on regional financial performance with a result of 0.006 indicating that the allocation of indirect expenditure is higher than the direct expenditure allocation. Balancing funds have a positive effect on economic growth with a result of 0.031 indicating that the amount of general allocation funds, special allocation funds, and profit-sharing funds has increased so that economic growth also increases. Regional expenditure has a positive effect on economic growth with a result of 0.020` indicating that there is infrastructure development undertaken to encourage regional economic growth. Regional financial performance has a positive effect on economic growth with a result of 0.009 indicating that regional capability is getting better based on the results of the ratio of independence, effectiveness, and efficiency.
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