Abstract
This study aims to examine the effect of financial performance on capital expenditure and economic growth in regency / city of North Maluku Province. The population was all districts and cities in North Maluku Province. Sampling was done by saturated sample method to 10 districts and cities in province of North Maluku. The research uses secondary data from Budget Realization Report 2016-2019 of audited Local Government Financial Statements by Republic of Indonesia Financial Audit Board. The research hypothesis was tested using Partial Least Square (PLS) analysis. This study results shows that financial performance affects on capital expenditures allocation, financial performance affects on economic growth, capital expenditures affect on economic growth, and financial performance affects on economic growth in districts / cities of North Maluku Province in 2016 - 2019 through the capital expenditures allocation. All the research results above can be proven at t count> t table and a significance value that is lower than 0.05. Keywords: Financial Performance, Capital Expenditures, Economic Growth. DOI: 10.7176/PPAR/11-3-03 Publication date: April 30 th 2021
Highlights
The financial performance measurement is needed to the condition of financial management (Kaeng, AR 2015)
Financial performance affects on capital expenditures allocation in districts / cities of North Maluku Province
Financial performance affects on economic growth in districts / cities of North Maluku Province
Summary
The financial performance measurement is needed to the condition of financial management (Kaeng, AR 2015). Halim (2013) stated that financial performance was the achievement level of a target for local government financial activities. This level of achievement is measured through financial indicators which can be assessed from results of accountability for implementation of Local Revenue and Expenditure Budget (APBD). Financial capability is the conformity of results of financial performance with the planned targets. The financial ratios used to analyze government financial performance include four ratios of (1) Local Financial Independence Ratio, (2) local revenue (PAD) Effectiveness Ratio, (3) Local Financial Efficiency Ratio. Measurement of financial performance at local governments can be used to assess the accountability and financial capacity of regions in implementing local autonomy (Mardiasmo, 2009)
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