IDEAS home Printed from https://ideas.repec.org/a/itr/itrevj/v10y2025i3p232-243id1117.html

Loan Management Effectiveness and Compliance in the Jakarta Provincial Government

Author

Listed:
  • Hamdani

  • Efa Yonnedi

Abstract

Research Originality — Empirical studies on regional loan management remain limited, particularly in contexts where local governments operate without central fiscal transfers. Jakarta’s unique case of maintaining budget surpluses while utilizing loans provides novel insights that contribute to the limited literature on loan management in developing countries. Research objectives — This research examines the effectiveness of loan utilization in Jakarta, which is unique among regional governments for operating without general allocation fund (DAU) transfers until 2023 and for consistently maintaining a budget surplus despite taking loans. Research Methods — A desk-based qualitative analysis was conducted using audited financial statements (LKPD) from 2015 to 2022, along with the unaudited 2023 budget realization report (LRA). Seven performance indicators were applied to rigorously assess the effectiveness of loan utilization. Empirical Result — The findings indicate inadequate loan performance. Jakarta only required loans in 2019, while the 2018 deficit could still be covered by net financing without borrowing. Moreover, of the six budget-year loans, three failed to comply with the provisions of Government Regulation Number 56 of 2018. Implications — The study recommends a rigorous examination of regional cash availability, based on the remaining budget calculation (SiLPA) or year-end cash balance, prior to loan issuance. The findings also highlight the importance of prognosis analysis of local cash in loan decisions, providing a theoretical contribution to public financial management and informing potential policy reforms in loan evaluation by the Ministry of Home Affairs and the Ministry of Finance.

Suggested Citation

  • Hamdani & Efa Yonnedi, 2025. "Loan Management Effectiveness and Compliance in the Jakarta Provincial Government," Indonesian Treasury Review: Jurnal Perbendaharaan, Keuangan Negara dan Kebijakan Publik, Direktorat Jenderal Perbendaharaan, Kementerian Keuangan, vol. 10(3), pages 232-243.
    • Handle: RePEc:itr:itrevj:v:10:y:2025:i:3:p:232-243:id:1117
    as

    Download full text from publisher

    File URL: https://itrev.kemenkeu.go.id/index.php/ITRev/article/view/1117
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lewis, B. D., 2003. "Erratum to "Local Government Borrowing and Repayment in Indonesia: Does Fiscal Capacity Matter?" World Development 31(6), pp. 1047-1063 (2003)," World Development, Elsevier, vol. 31(12), pages 2173-2173, December.
    2. Wan, Rui & Fan, Wencheng & Wang, Xiaoping, 2024. "Local government financing vehicle restructuring, implicit government guarantees and debt financing costs: Evidence from the Chinese municipal corporate bond market," Economic Systems, Elsevier, vol. 48(2).
    3. Philip R. Lane, 2012. "The European Sovereign Debt Crisis," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 49-68, Summer.
    4. Bao, Helen X.H. & Wang, Ziyou & Wu, Robert Liangqi, 2024. "Understanding local government debt financing of infrastructure projects in China: Evidence based on accounting data from local government financing vehicles," Land Use Policy, Elsevier, vol. 136(C).
    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. Kong, Wei & Sharma, Susan Sunila & Zhao, Xin-Xin & Shi, Yao-Bo, 2025. "The rescue effect of local government financing vehicles on real estate enterprises in China," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    2. Wang, Lei & Sha, Yifan & Ding, Lili & Zhao, Zhongchao, 2024. "Risk mitigation strategies in urban investment bonds: Insights from local government implicit debt governance," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 607-618.
    3. World Bank, 2003. "Decentralizing Indonesia : A Regional Public Expenditure Review Overview Report," World Bank Publications - Reports 14632, The World Bank Group.
    4. Kawecka-Wyrzykowska Elżbieta, 2013. "Enhanced Economic Governance in the EU: Alternative to a Political Union?," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 37(1), pages 10-35, March.
    5. Kinateder, Harald & Wagner, Niklas, 2017. "Quantitative easing and the pricing of EMU sovereign debt," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 1-12.
    6. Wegener, Christoph & Kruse, Robinson & Basse, Tobias, 2019. "The walking debt crisis," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 382-402.
    7. Stijn Claessens & M. Ayhan Kose, 2013. "Financial Crises: Explanations, Types and Implications," CAMA Working Papers 2013-06, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    8. Dimic, Nebojsa & Piljak, Vanja & Swinkels, Laurens & Vulanovic, Milos, 2021. "The structure and degree of dependence in government bond markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    9. B M, Lithin & chakraborty, Suman & iyer, Vishwanathan & M N, Nikhil & ledwani, Sanket, 2022. "Modeling asymmetric sovereign bond yield volatility with univariate GARCH models: Evidence from India," MPRA Paper 117067, University Library of Munich, Germany, revised 05 Jan 2023.
    10. Yanfang Zhang & Mushang Lee, 2019. "A Hybrid Model for Addressing the Relationship between Financial Performance and Sustainable Development," Sustainability, MDPI, vol. 11(10), pages 1-15, May.
    11. Brunnermeier, Markus & De Gregorio, José & Eichengreen, Barry & El-Erian, Mohamed & Fraga, Arminio & Ito, Takatoshi & Lane, Philip R. & Pisani-Ferry, Jean & Prasad, Eswar & Rajan, Raghuram & Ramos, Ma, 2012. "Banks and cross-border capital flows: challenges and regulatory responses," LSE Research Online Documents on Economics 102439, London School of Economics and Political Science, LSE Library.
    12. Massimo Amato & Everardo Belloni & Carlo A. Favero & Lucio Gobbi & Francesco Saraceno, 2024. "Stabilising market expectations through a market tool: a proposal for an enhanced TPI," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 41(2), pages 597-615, July.
    13. Martin Gächter & Alexander Gruber & Aleksandra Riedl, 2017. "Wage Divergence, Business Cycle Co-Movement and the Currency Union Effect," Journal of Common Market Studies, Wiley Blackwell, vol. 55(6), pages 1322-1342, November.
    14. Cervera, Ignacio & Figuerola-Ferretti, Isabel, 2024. "Credit risk and bubble behavior of credit default swaps in the corporate energy sector," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 702-731.
    15. Andrea Bonilla‐Bolaños, 2021. "A step further in the theory of regional integration: A look at the South American integration strategy," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(5), pages 845-873, July.
    16. Nikolaos Antonakakis & Ioannis Chatziantoniou & David Gabauer, 2021. "The impact of Euro through time: Exchange rate dynamics under different regimes," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1375-1408, January.
    17. Christian Keuschnigg & Klaus Weyerstrass, 2015. "Macroeconomic Adjustment and Institutional Reforms in the Euro Area," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 275-285, August.
    18. Filippo Balestrieri & Mr. Suman S Basu, 2018. "An Imperfect Financial Union With Heterogeneous Regions," IMF Working Papers 2018/205, International Monetary Fund.
    19. Eric Swanson, 2015. "A Macroeconomic Model of Equities and Real, Nominal, and Defaultable Debt," 2015 Meeting Papers 273, Society for Economic Dynamics.
    20. Brigitte Granville, 2013. "The Current Eurozone – an impediment to critical French reform," Working Papers 42, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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:itr:itrevj:v:10:y:2025:i:3:p:232-243:id:1117. 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: Anggito Abimanyu (email available below). General contact details of provider: https://itrev.kemenkeu.go.id/index.php/ITRev/ .

    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.