IDEAS home Printed from https://ideas.repec.org/a/rnd/arjebs/v14y2022i3p42-50.html
   My bibliography  Save this article

Local Government Financial Performance: The Role of Political Monitoring

Author

Listed:
  • Miranti Putri
  • Khoirul Aswar

Abstract

This study intends to investigate and demonstrate the impact of local government financial performance as influenced by political oversight, regional wealth, intergovernmental revenue, and capital spending. In Indonesia in 2019, the district/city local governments were the subject of this study. The Report on Local Government Finances (LKPD) accessible at the Audit Board of the Republic of Indonesia was used as secondary data (BPK RI). The data used in this study included 491 data samples chosen using the purposive selection approach from 507 districts/cities across Indonesia. The analytical method used in this study was path analysis with Smart PLS software and a significance level of 5%. Structural Equation Modeling was used for data analysis (SEM). The findings of this investigation showed that regional wealth, intergovernmental revenue, and capital expenditures have an impact on local government's financial performance. Political supervision, however, does not mitigate the association between intergovernmental revenues and capital expenditures on the financial performance of local governments, which reduces the relationship between regional wealth and local government financial performance. The results of this study are anticipated to be used as source material for studies on the factors affecting local government financial performance and to help local governments by providing information on the monitoring activities carried out by numerous Regional People's Representative Council (DPRD) members. As a result, local governments will be encouraged to increase legislative oversight to improve their financial performance.

Suggested Citation

  • Miranti Putri & Khoirul Aswar, 2022. "Local Government Financial Performance: The Role of Political Monitoring," Journal of Economics and Behavioral Studies, AMH International, vol. 14(3), pages 42-50.
    • Handle: RePEc:rnd:arjebs:v:14:y:2022:i:3:p:42-50
    DOI: 10.22610/jebs.v14i3(J).3307
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/3307/2106
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/jebs/article/view/3307
    Download Restriction: no
    File URL: https://libkey.io/10.22610/jebs.v14i3(J).3307?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Regita Oktaviani & Satria Yudhia Wijaya & ermawati, 2020. "Factors Affecting the Local Governments Financial Performance," Journal of Economics and Behavioral Studies, AMH International, vol. 12(4), pages 84-89.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Lovina Eka Putri & Khoirul Aswar & Ermawati, 2020. "Performance Measurement of Local Government in Indonesia: A Conceptual Study," Information Management and Business Review, AMH International, vol. 12(1), pages 41-44.
    4. Khoirul Aswar & Lovina Eka Putri & Ermawati, 2020. "The Effect of Organizational Factors on Performance Measurement in Indonesia Local Governments," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 122-131.
    5. Luna Nur Amalina & Mahendro Sumardjo, 2020. "The Effect of Local Expenditure, Local Wealth Level, Audit Opinion, and Audit Findings on the Performance of Indonesian Local Governments," Information Management and Business Review, AMH International, vol. 12(2), pages 12-19.
    6. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
    7. Mr. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Working Papers 1998/063, International Monetary Fund.
    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. Argandoña, Antonio, 2003. "Private-to-private corruption," IESE Research Papers D/531, IESE Business School.
    2. Cuervo-Cazurra, Alvaro & Rui, Huaichuan, 2017. "Barriers to absorptive capacity in emerging market firms," Journal of World Business, Elsevier, vol. 52(6), pages 727-742.
    3. Riaz, Zahid & Ray, Pradeep & Ray, Sangeeta, 2022. "The impact of digitalisation on corporate governance in Australia," Journal of Business Research, Elsevier, vol. 152(C), pages 410-424.
    4. Chami, Ralph & Fullenkamp, Connel, 2002. "Trust and efficiency," Journal of Banking & Finance, Elsevier, vol. 26(9), pages 1785-1809, September.
    5. D'Souza, Juliet & Nash, Robert, 2017. "Private benefits of public control: Evidence of political and economic benefits of state ownership," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 232-247.
    6. Cuervo-Cazurra, Alvaro, 2016. "Corruption in international business," Journal of World Business, Elsevier, vol. 51(1), pages 35-49.
    7. Norman Bishara & Cindy Schipani, 2009. "Strengthening the Ties that Bind: Preventing Corruption in the Executive Suite," Journal of Business Ethics, Springer, vol. 88(4), pages 765-780, October.
    8. Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2009. "Why is corruption less harmful in some countries than in others?," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 797-810, December.
    9. Maria Kravtsova & Aleksey Oshchepkov, 2019. "Market And Network Corruption," HSE Working papers WP BRP 209/EC/2019, National Research University Higher School of Economics.
    10. Towfiqul Islam Khan & Mashfique Ibne Akbar, 2015. "Illicit Financial Flow in view of Financing the Post-2015 Development Agenda," Southern Voice Occasional Paper 25, Southern Voice.
    11. Cosmina Lelia Voinea & Hans van Kranenburg, 2017. "Media Influence and Firms Behaviour: A Stakeholder Management Perspective," International Business Research, Canadian Center of Science and Education, vol. 10(10), pages 23-38, October.
    12. Ghulam Shabbir & Mumtaz Anwar & Shahid Adil, 2016. "Corruption, Political Stability and Economic Growth," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 689-702.
    13. Gaoussou Diarra & Sébastien Marchand, 2011. "Environmental Compliance, Corruption and Governance: Theory and Evidence on Forest Stock in Developing Countries," CERDI Working papers halshs-00557677, HAL.
    14. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
    15. Joan Rosselló Villalonga, 2018. "Fiscal centralization: a remedy for corruption?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(4), pages 457-474, November.
    16. Mutascu, Mihai, 2009. "The effect of the government intervention in economy on corruption," MPRA Paper 16175, University Library of Munich, Germany.
    17. repec:ces:ifodic:v:9:y:2011:i:2:p:16134033 is not listed on IDEAS
    18. Ghosh Dastidar Sayantan, 2017. "Impact of Remittances on Economic Growth in Developing Countries: The Role of Openness," Global Economy Journal, De Gruyter, vol. 17(2), pages 1-12, June.
    19. Guriev, Sergei, 2004. "Red tape and corruption," Journal of Development Economics, Elsevier, vol. 73(2), pages 489-504, April.
    20. Graziella Bonanno & Lucia Errico & Nadia Fiorino & Roberto Ricciuti, 2024. "The Impact of Government Size on Corruption: A Meta-Regression Analysis," CESifo Working Paper Series 10956, CESifo.
    21. Keith Blackburn & Rashmi Sarmah, 2006. "Red Tape, Corruption and Finance," Economics Discussion Paper Series 0639, Economics, The University of Manchester.

    More about this item

    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:rnd:arjebs:v:14:y:2022:i:3:p:42-50. 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: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/jebs .

    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.