The Effect of Economic Growth and Regional Expenditure Efficiency on Regional Financial Independence in Central Java Province in 2024
DOI:
https://doi.org/10.24256/kharaj.v8i3.12172Keywords:
Regional Financial Independence, Economic Growth, Expenditure Efficiency, Regional Original Revenue, Fiscal Decentralization, Regional Fiscal Capacity.Abstract
This study aims to analyze the influence of economic growth and regional spending efficiency on regional financial independence in 35 districts/cities in Central Java Province in 2024. Regional financial independence is measured through the contribution of Regional Original Revenue (PAD) to total regional revenue. The research uses a quantitative approach with secondary data sourced from the Central Statistics Agency. The analysis was carried out using multiple linear regression by first meeting the classical assumption test. The results of the study show that simultaneously economic growth and regional spending efficiency have a significant effect on regional financial independence. However, partially, economic growth does not have a significant effect, while the efficiency of regional spending has a positive and significant effect on fiscal independence. These findings indicate that increasing regional financial independence does not only depend on economic growth, but is more determined by the effectiveness and efficiency of regional expenditure management. This research provides important implications for the formulation of regional fiscal policies that are oriented towards improving the quality of public spending.
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