The Effect of Financial Performance and Budget Ratcheting on Capital Expenditure Allocation in Districts/Cities of Central Java Province
Journal Title: Journal of Economics, Finance and Management Studies - Year 2024, Vol 7, Issue 02
Abstract
This study examines the effect of regional financial performance (effectiveness ratio, efficiency, fiscal decentralization) and budget ratcheting on the allocation of capital expenditure in local governments in Central Java Province from 2018-2021. The population in this study were all Regency/City Regional Governments in Central Java Province in 2018-2021. The sample used was 35 local governments. Hypothesis testing using panel data regression. The results showed that regional financial performance (effectiveness ratio, efficiency, fiscal decentralization) and budget ratcheting affect capital expenditure allocation. Effectiveness and efficiency ratios negatively affect capital expenditure allocation, fiscal decentralization ratio positively affects capital expenditure allocation, and budget ratcheting negatively affects capital expenditure allocation. This study provides empirical evidence that one of the tools to analyze regional financial performance in managing regional finances is to conduct a financial ratio analysis. The novelty of this research is the addition of budget ratcheting variables that have not been widely studied in Indonesia, especially those using local government objects.
Authors and Affiliations
1Fahtia Nur Hanifah, Jaka Winarna
Keywords
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- EP ID EP730615
- DOI 10.47191/jefms/v7-i2-05
- Views 73
- Downloads 0
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