Factors Affecting the Financial Performance of Local Governments

Ony Widilestariningtyas, Mia Nur Alifa, H. Henny

ICOBEST 2020 - New Era, the Trend towards Global Challenge after Covid-19 Pandemic - ISBN 978-623-95562-0-4

Abstract

Problem factors that affect the financial performance of local governments include local taxes and balancing funds. Increasing local tax sources and decreasing balancing funds in Tasikmalaya Regency were not accompanied by increased financial performance, but what happened was a decline in financial performance. The purpose of this study was to determine how much the factors that influence the financial performance of local governments in West Java Province. This research uses descriptive analysis method with verification approach. The secondary data source is 27 LHP (Audit Result Report) in the form of LKPD (Regional Government Performance Report). Descriptive analysis uses descriptive statistics and verification analysis uses multiple linear regression analysis. The results showed that the local tax factor has a positive effect on financial performance and the balancing fund factor has a negative effect on financial performance. So it can be concluded that the most important factor in regional financial performance is increasing local tax revenue as a major component of financial independence for local governments, so that the ability of local governments to develop their territories becomes more flexible in implementing equitable distribution of community welfare in West Java Province.

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