The purpose of this study was conducted to determine the effect of capital expenditures and balancing funds on regional financial. To find out Regional Original Income (PAD) as a moderating variable that moderates the relationship between Capital Expenditures and Balancing Funds on Regional Financial Performance in Regency and City Governments in the Riau Archipelago Province. The population is 7 districts/cities in the Riau Archipelago which were sampled with the 2011-2017 observation period. This study uses partial regression analysis (Partial Least Square / PLS) to test the five hypotheses proposed in this study. Each hypothesis will be analyzed using Smart PLS 2.0 software to examine the relationship between variables. The results showed that Capital Expenditures had no significant effect on Regional Financial Performance, as indicated by the t-statistic value of 0.029 which is smaller than the t-table value of 1.674. Balancing Funds obtained a p-value of 0.001 with a t-statistic value of 3.203 > 1.674, which means that Balancing Funds have a significant positive effect on Regional Financial Performance with a significance level above 5% (significant). The test results for Regional Original Income (PAD) moderate the relationship between Capital Expenditures obtaining a p-value of 0.347 with a t-statistic value of -0.941 <1.674 t-table which means that the Regional Original Income (PAD) variable moderates the relationship between Capital Expenditure of 0.85% which has no significant effect with significance on Regional Financial Performance above 5% (significant). Local Own Revenue (PAD) moderates the relationship between Balancing Funds on Regional Financial Performance with a p-value of 0.727 with a t-statistic value of 0.349 <1.674 which means that Regional Original Income (PAD) moderates the relationship between Balancing Funds that has no significant effect on Regional Financial Performance with a significance level below 5% (significant). The F table value is at 5% significance with df1 = 3 and df2 = (49-3) of 2.84. The Fhiung value of the regional financial performance variable (12.31) is greater than (<) the Ftable value (2.84), with this result there is a mutual influence between the variables Capital Expenditures, Balancing Funds on Regional Financial Performance.
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