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The Effect of Financial Performance and Balanced Funds on Capital Expenditure of Local Government in District/City in Indonesia

Author

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  • Kornelis Kopong Bolen
  • Payamta -

Abstract

Many regional governments in district/city still allocate their capital expenditures below 30%. It is not in line with expectations as mandated in Regulation of the Minister of Home Affairs on Guidelines for Preparation of Regional Income and Expenditure Budget (APBD). The purpose of this study is to examine the effect of financial performance and balance funds on the allocation of capital expenditures for district /city governments in Indonesia. The sample used in this study were 473 district/city governments consisting of 382 district governments and 91 city governments. Meanwhile, the type of data used was secondary data. The analysis in the study was based on reports on the realization of the 2013 to 2017 budget audited by The Supreme Audit Agency of The Republic of Indonesia (BPK).The results of multiple regression analysis show first, Regional Financial Independence and General Allocation Funds have a negative but significant effect on Capital Expenditures. Second, Regional Financial Effectiveness, Revenue Sharing Funds, and Special Allocation Funds have a positive and significant effect on Capital Expenditures. Third, Regional Financial Efficiency does not significantly affect Capital Expenditures.

Suggested Citation

  • Kornelis Kopong Bolen & Payamta -, 2019. "The Effect of Financial Performance and Balanced Funds on Capital Expenditure of Local Government in District/City in Indonesia," Journal of Public Administration and Governance, Macrothink Institute, vol. 9(4), pages 129-147, December.
    • Handle: RePEc:mth:jpag88:v:9:y:2019:i:4:p:129-147
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    References listed on IDEAS

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    1. Lufki Laila Nurhidayati & Rizal Yaya, 2013. "Alokasi Belanja Modal Untuk Pelayanan Publik: Praktik Di Pemerintah Daerah," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 17(2), pages 102-114.
    2. Lufki Laila Nurhidayati & Rizal Yaya, 2013. "Alokasi Belanja Modal Untuk Pelayanan Publik: Praktik Di Pemerintah Daerah," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 17(2), pages 102-114, Desember.
    3. Faguet, Jean-Paul, 2004. "Does decentralization increase government responsiveness to local needs?: Evidence from Bolivia," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 867-893, March.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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