IDEAS home Printed from https://ideas.repec.org/a/iaf/journl/y2021i4p55-61.html
   My bibliography  Save this article

The Effect of Village Funds, Special Allocation Funds, Revenue Sharing Funds on Regional Inequality in the Regencies/Cities of South Sumatra Province

Author

Listed:
  • Fatimah Audia Amelia

    (Sriwijaya University, Palembang, Indonesia)

  • Azwardi

    (Sriwijaya University, Palembang, Indonesia)

  • Sukanto

    (Sriwijaya University, Palembang, Indonesia)

Abstract

Regions' development is a high priority for Indonesia and is critical for food, equity, and economic growth. To address the problems of economic inequality between regions, the government has created several funds to balance funding for regional development. This study aims to analyze the effect of the Village Funds (DD), Special Allocation Funds (DAK), Revenue Sharing Funds (DBH) on Regional Inequality in the Regencies/Cities of South Sumatra Province during 2015-2019. The research covers 14 regencies and cities of South Sumatra Province. This study uses secondary data, including Village Funds, Special Allocation Funds, Revenue Sharing Funds, and Regional Inequality. Meanwhile, other data is available from the Central Statistics Agency of South Sumatra Province and the Directorate General of Fiscal Balance. The data analysis method used is the Williamson Index and panel data regression analysis that has met the requirements of the classical assumption test and model suitability test. The results of this study are as follows: (1) The Village Funds have a positive and significant effect on Regional Inequality, with the regression coefficient value reaching 0.067. It means that every 1% increase in village funds will increase the value of regional inequality by 0.067. (2) Special Allocation Funds (DAK) and Revenue Sharing Funds (DBH) have a negative and significant effect on Regional Inequality. Each increase in the Special Allocation Fund and Profit Sharing Fund by 1% will cause a decrease in the Regional Inequality Index by 0.022 and 0.050. (3) Regional Inequality in South Sumatra Province is significantly determined by 72% of the variables of the Village Funds, Special Allocation Funds (DAK), and Revenue Sharing Funds (DBH). In comparison, other variables outside the model determine the remaining 28%.

Suggested Citation

  • Fatimah Audia Amelia & Azwardi & Sukanto, 2021. "The Effect of Village Funds, Special Allocation Funds, Revenue Sharing Funds on Regional Inequality in the Regencies/Cities of South Sumatra Province," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 55-61, December.
    • Handle: RePEc:iaf:journl:y:2021:i:4:p:55-61
    DOI: 10.33146/2307-9878-2021-4(94)-55-61
    as

    Download full text from publisher

    File URL: http://www.afj.org.ua/pdf/868-vpliv-silskih-fondiv-fondiv-cilovogo-finansuvannya-fondiv-rozpodilu-dohodiv-na-regionalnu-nerivnist-u-regentstvah-mistah-provincii-pivdenna-sumatra.pdf
    Download Restriction: no
    File URL: http://www.afj.org.ua/en/article/868/
    Download Restriction: no
    File URL: https://libkey.io/10.33146/2307-9878-2021-4(94)-55-61?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robin Boadway & Anwar Shah, 2007. "Intergovernmental Fiscal Transfers : Principles and Practice," World Bank Publications - Books, The World Bank Group, number 7171, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amélie BARBIER-GAUCHARD, 2020. "Blueprint for the European Fiscal Union: State of knowledge and Challenges," Working Papers of BETA 2020-39, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. Suzuki, Takafumi, 2021. "Capitalization of local government grants on land values: Evidence from Tokyo metropolitan area, Japan," Japan and the World Economy, Elsevier, vol. 60(C).
    3. Schakel, Arjan Hille, 2009. "A Postfunctionalist Theory of Regional Government," MPRA Paper 21596, University Library of Munich, Germany.
    4. Genqiang Lei & Xiaohong Huang & Penghui Xi, 2016. "The impact of transfer payments on urban-rural income gap: based on fuzzy RD analysis of China’s midwestern county data," China Finance and Economic Review, Springer, vol. 4(1), pages 1-17, December.
    5. Evgeny N. Timushev, 2019. "Federal Intergovernmental Transfers and the Level of Intraregional Fiscal Decentralization in Russia," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 27-42, December.
    6. Otong Suhyanto & Bambang Juanda & Akhmad Fauzi & Ernan Rustiadi, 2021. "The Effect of Transfer Funds on District/Municipality Development Performance in West Java Province Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 11(3), pages 22-27.
    7. Jeffrey Clemens & Benedic Ippolito, 2018. "Implications of Medicaid Financing Reform for State Government Budgets," Tax Policy and the Economy, University of Chicago Press, vol. 32(1), pages 135-172.
    8. Resce, Giuliano, 2022. "The impact of political and non-political officials on the financial management of local governments," Journal of Policy Modeling, Elsevier, vol. 44(5), pages 943-962.
    9. Wang, Wenming & Kawachi, Keisuke & Ogawa, Hikaru, 2017. "Does equalization transfer enhance partial tax cooperation?," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 431-443.
    10. Bev Dahlby & Kevin Milligan, 2017. "From theory to practice: Canadian economists’ contributions to public finance," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1324-1347, December.
    11. Francisco Pedraja Chaparro & José Manuel Cordero Ferrera, 2011. "Analysis of alternative proposals to reform the Spanish intergovernmental transfer system for municipalities," Working Papers 2011/33, Institut d'Economia de Barcelona (IEB).
    12. Salvador Barrios & Diego Martínez-López, 2017. "Fiscal equalization schemes and subcentral government borrowing," Chapters, in: Naoyuki Yoshino & Peter J. Morgan (ed.), Central and Local Government Relations in Asia, chapter 4, pages 130-160, Edward Elgar Publishing.
    13. Deryugin Alexander, 2017. "Regional Equalization: Do Any Incentives for Regional Development Still Exist?," Working Papers wpaper-2017-299, Gaidar Institute for Economic Policy, revised 2017.
    14. Paul Smoke, 2019. "Improving Subnational Government Development Finance in Emerging and Developing Economies: Towards a Strategic Approach," Working Papers id:13007, eSocialSciences.
    15. Carlos A. Vegh y Guillermo Vuletin, 2016. "Unsticking the flypaper effect using distortionary taxation," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 62, pages 185-237, January-D.
    16. Litschig, Stephan, 2012. "Are rules-based government programs shielded from special-interest politics? Evidence from revenue-sharing transfers in Brazil," Journal of Public Economics, Elsevier, vol. 96(11), pages 1047-1060.
    17. Grégoire ROTA-GRAZIOSI & Emilie CALDEIRA, 2014. "La décentralisation dans les pays en développement : une revue de la littérature - Decentralization in developing countries: A literature review," Working Papers 201411, CERDI.
    18. Ralf Hepp & Jürgen von Hagen, 2012. "Fiscal Federalism in Germany: Stabilization and Redistribution Before and After Unification," Publius: The Journal of Federalism, CSF Associates Inc., vol. 42(2), pages 234-259, April.
    19. Mogues, Tewodaj & Olofinbiyi Tolulope, 2017. "Institutions And Public Agricultural Investments: A Qualitative Study Of State And Local Government Spending In Nigeria," Feed the Future Innovation Lab for Food Security Policy Research Papers 259576, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    20. Michihito Ando, 2017. "How much should we trust regression-kink-design estimates?," Empirical Economics, Springer, vol. 53(3), pages 1287-1322, November.

    More about this item

    Keywords

    Village Fund; Special Allocation Fund; Revenue Sharing Fund; Regional Inequality; State Revenue and Expenditure Budget; Regional Revenue and Expenditure Budget;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iaf:journl:y:2021:i:4:p:55-61. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Serhiy Ostapchuk (email available below). General contact details of provider: https://edirc.repec.org/data/iafkvua.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.