The Moderating Effect Of Regional Indpendence On The Effect Of Financing Policies, Capital Expenditure And Transfer Fund Towards The Performance Of Local Governments

Niko Silitonga Et Al

doi:10.17762/turcomat.v12i3.2153

Abstract

The performance of local governments is one of the measuring tools in assessing whether the government has carried out the mandate given by the community to manage their regions properly and measurably. This study purpose to determine the effect of financing policies, capital expenditures and transfer funds on the performance of local governments with regional independence as a moderating variable in the provincial government in Indonesia. This study uses a quantitative research model using secondary data. The data in this study were processed using the Moderating Regression Analysis (MRA) method supported by the IBM SPSS and Microsoft Excel programs as support software with data analysis techniques in the form of classical assumption tests as well as R2 test, F test, and t test. The population in this study are provinces that have consistently published annual local government financial reports during 2014-201. This study used purposive sampling technique and obtained samples of 33 provinces according to predetermined criteria. The results of this study indicate that the financing policy proxied by net revenue has no effect on local government performance, while capital expenditure and transfer funds have a significant negative effect on local government performance, regional independence strengthens the relationship between capital expenditure and transfer funds to local government performance, meanwhile regional independence does not have a moderating role between the relationship between financing policies and local government performance. This study uses data from provinces in Indonesia, it is suggested that further research should add district / city level local governments with an extended period of time

Highlights

The management of the area of an area along with existing resources is very vital in the operation of the regional government, especially with the rolling out of the implementation of regional autonomy based on Law No of 2004 on Regional Government and Law no. of 2004 on the financial balance between the central government and local governments.Local governments are required to be able to run their government optimally in order to achieve regional independence, this is one of the benchmarks for assessing the performance of local governments both quantitatively in financial performance and qualitatively in the welfare of the people in their area
It was found that capital expenditure has a negative and significant effect on government performance as measured by the human development index, this result shows that a decrease in capital spending will have an impact on optimizing the use of government budget funds to increase other productive things for the welfare of the community such as for the purposes of education, health and other social services that are reflected in the human development index in the blood, this result is in line with the research of Setyawan, M Rudy and Arief, Sjamsul (2019) which states that Fiscal Decentralization, Economic Growth and Capital Spending have a significant positive effect on the index. human development in 9 cities in East Java province
It was found that the interaction between routine ability index and net income had no effect on government performance as measured by the human development index. These results indicate that the revenue and expenditure financing policies taken by the government in the context of regional independence do not have a direct impact on the welfare that is felt directly. by the community but plays a greater role in the political, financial and regional government budget aspects, in other words, transfer funds are only able to increase regional independence but have not been able to raise the welfare of the community, this is in line with the research results of Muana, Nanga and Runtuk, J Krisnanto (2020). which indicates that the General Allocation Fund and the Revenue Sharing Fund have a significant effect on the level of regional independence

Summary

Introduction

Local governments are required to be able to run their government optimally in order to achieve regional independence, this is one of the benchmarks for assessing the performance of local governments both quantitatively in financial performance and qualitatively in the welfare of the people in their area. One of the indicators of community welfare that is often used as a reference is the human development index (HDI) which explains how a group of residents in an area can access development outcomes in the form of a decent standard of living, health and education. The three indicators in the human development index (HDI) was very important because they can describe the quality of life of the people living in that area. Human resources have an important role in determining the progress or withdrawal of an area at both the regional and state levels in addition to other factors (Todaro, 2000)

Methods

Discussion

Conclusion