The Impact of Leverage, Equalization Funds, and Capital Expenditures on the Financial Performance of Regency and City Goverments in South Sumatra Province, 2020-2024

Siti Novia Santi; Sarikadarwati Sarikadarwati; Selvita Meilansari

doi:10.31851/jmwe.v23i3.21937

Authors

Siti Novia Santi Politeknik Negeri Sriwijaya
Sarikadarwati Sarikadarwati Politeknik Negeri Sriwijaya
Selvita Meilansari Politeknik Negeri Sriwijaya

DOI:

https://doi.org/10.31851/jmwe.v23i3.21937

Abstract

ABSTRACT

This study aims to examine and analyze the influence of leverage, equalization funds, and capital expenditures on the financial performance of regency and city governments in South Sumatra Province over the 2020-2024 period. Financial performance was assessed using the local government financial autonomy ratio as the primary measurenment indicator. The research population and sample encompass all 17 regencies and cities in South Sumatra Province, observed across a five-year period, resulting in a total of 85 data points. Secondary data were utilized, sourced from Budget Implementation Reports (LRA) and regional balance sheets obtained through the official website of the Directorate General of Fiscal Equalization (DJPK) of the Ministry of Finance of the Republic of Indonesia. The findings reveal that, when examined individually, leverage exerts a negative and significant influence on local government financial performance equalization funds likewise

demonstrate a negative and significant effect on local government financial performance; while capital expenditures produce a positive and significant effect on local government financial performance. When assessed jointly, the three variables simultaneously demonstrate a statistically significant collective influence on the financial performance of regency and city governments in South Sumatra Province throughout the 2020–2024 period.

Keywords:

Leverage, Equalization Funds, Capital Expenditures

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