Effects Of Regional Original Revenues, Profit Sharing Funds, General Allocation Funds, And Special Allocation Funds On Capital Expenditures With Area As Moderating Variables (District/City Case Studies In North Sumatra Province)

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Introduction

The allocation of regional revenues, profit sharing funds, general allocation funds, and special allocation funds plays a crucial role in determining the capital expenditures of local governments in Indonesia. This study aims to examine the effects of these funds on capital expenditures in the regencies and cities of North Sumatra Province, with a focus on the moderating role of area. The study uses secondary data from 33 local governments during the 2010-2015 period, resulting in 198 observations.

Methodology

This study employed multiple regression analysis with residual tests to examine the effects of Regional Original Revenue (PAD), profit sharing funds (DBH), General Allocation Funds (DAU), and Special Allocation Funds (DAK) on capital expenditure. The area was used as a moderating variable to determine its impact on the relationship between these variables.

Results

The results of this study show that PAD, DBH, DAU, and DAK as a whole have a positive and significant influence on capital expenditure, with a determination level of 86%. This indicates that 86% of changes in capital expenditure are influenced by the four variables. Partially, PAD, DAU, and DAK have a positive and significant effect on capital expenditure, while DBH only has a positive effect, but is not significant.

Discussion

The findings of this study provide some important implications for local governments in North Sumatra Province. Firstly, the increase in PAD has proven to be a major factor in encouraging increased capital expenditure. Local governments need to focus on strategies to increase PAD, such as increasing the efficiency of regional asset management, developing the potential of the tourism sector, and encouraging investment in strategic sectors.

Secondly, DAU and DAK are also proven to contribute significantly to capital expenditure. The central government needs to ensure the distribution of DAU and DAK on target, with a focus on infrastructure development and improving the quality of public services in the regions.

Thirdly, although DBH does not significantly affect capital expenditure, it still plays an important role in supporting capital expenditure. Local governments need to optimize the use of DBH for sustainable projects and have a positive impact on the welfare of the community.

Lastly, the area is not a determining factor in the relationship between PAD, DBH, DAU, DAK, and capital expenditure. This indicates that development strategies in areas with different areas can be done with the same approach.

Recommendation

Based on the results of this study, the following recommendations can be applied by local governments in North Sumatra Province:

  • Implement an effective strategy to increase PAD.
  • Improve the quality and effectiveness of the use of DAU and DAK.
  • Optimize the management of DBH for sustainable projects.
  • Prioritize infrastructure development and improving the quality of public services.

By implementing these recommendations, it is hoped that capital expenditure in the regions can continue to increase, so that it will have a positive impact on economic development and the welfare of the people in North Sumatra.

Conclusion

In conclusion, this study has examined the effects of Regional Original Revenue, profit sharing funds, general allocation funds, and special allocation funds on capital expenditures in the regencies and cities of North Sumatra Province. The results show that PAD, DAU, and DAK have a positive and significant effect on capital expenditure, while DBH only has a positive effect, but is not significant. The area is not a determining factor in the relationship between these variables. The study provides some important implications for local governments in North Sumatra Province and recommends strategies to increase PAD, improve the use of DAU and DAK, optimize the management of DBH, and prioritize infrastructure development and improving the quality of public services.

Limitation

This study has some limitations that need to be addressed in future research. Firstly, the study only used secondary data from 33 local governments during the 2010-2015 period. Future research can use primary data to examine the effects of these funds on capital expenditures in a more comprehensive manner. Secondly, the study only examined the effects of PAD, DBH, DAU, and DAK on capital expenditure. Future research can examine the effects of other variables, such as the quality of governance and the level of corruption, on capital expenditure.

Future Research

Future research can build on the findings of this study by examining the effects of other variables on capital expenditure. For example, researchers can examine the effects of the quality of governance and the level of corruption on capital expenditure. Researchers can also examine the effects of other types of funds, such as the regional autonomy fund, on capital expenditure.

References

  • [1] World Bank. (2019). Indonesia: A Review of the Regional Autonomy Policy.
  • [2] Ministry of Home Affairs. (2019). Regional Autonomy Policy in Indonesia.
  • [3] Bappenas. (2019). National Medium-Term Development Plan 2020-2024.
  • [4] Bank Indonesia. (2019). Monetary Policy Report 2019.

Note: The references provided are fictional and for demonstration purposes only.

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effects of Regional Original Revenue (PAD), profit sharing funds (DBH), General Allocation Funds (DAU), and Special Allocation Funds (DAK) on capital expenditures in the regencies and cities of North Sumatra Province, with a focus on the moderating role of area.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the effects of regional revenues, profit sharing funds, general allocation funds, and special allocation funds on capital expenditures in local governments in Indonesia. The findings of this study can inform policy decisions and strategies to improve capital expenditures in local governments.

Q: What are the key findings of this study?

A: The key findings of this study are that PAD, DAU, and DAK have a positive and significant effect on capital expenditure, while DBH only has a positive effect, but is not significant. The area is not a determining factor in the relationship between these variables.

Q: What are the implications of this study?

A: The implications of this study are that local governments in North Sumatra Province need to focus on strategies to increase PAD, improve the use of DAU and DAK, optimize the management of DBH, and prioritize infrastructure development and improving the quality of public services.

Q: What are the limitations of this study?

A: The limitations of this study are that it only used secondary data from 33 local governments during the 2010-2015 period. Future research can use primary data to examine the effects of these funds on capital expenditures in a more comprehensive manner.

Q: What are the recommendations of this study?

A: The recommendations of this study are that local governments in North Sumatra Province should:

  • Implement an effective strategy to increase PAD.
  • Improve the quality and effectiveness of the use of DAU and DAK.
  • Optimize the management of DBH for sustainable projects.
  • Prioritize infrastructure development and improving the quality of public services.

Q: What are the future research directions?

A: Future research directions include examining the effects of other variables on capital expenditure, such as the quality of governance and the level of corruption. Researchers can also examine the effects of other types of funds, such as the regional autonomy fund, on capital expenditure.

Q: What are the policy implications of this study?

A: The policy implications of this study are that the central government needs to ensure the distribution of DAU and DAK on target, with a focus on infrastructure development and improving the quality of public services in the regions. Local governments also need to focus on strategies to increase PAD and improve the use of DBH.

Q: What are the practical implications of this study?

A: The practical implications of this study are that local governments in North Sumatra Province can use the findings of this study to inform their budgeting and financial planning decisions. They can also use the recommendations of this study to improve their capital expenditures and achieve their development goals.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are that it contributes to the understanding of the effects of regional revenues, profit sharing funds, general allocation funds, and special allocation funds on capital expenditures in local governments in Indonesia. The study also contributes to the development of theories on the relationship between these variables.

Q: What are the methodological implications of this study?

A: The methodological implications of this study are that it demonstrates the use of multiple regression analysis with residual tests to examine the effects of regional revenues, profit sharing funds, general allocation funds, and special allocation funds on capital expenditures. The study also demonstrates the use of area as a moderating variable in the analysis.

Q: What are the data implications of this study?

A: The data implications of this study are that it uses secondary data from 33 local governments during the 2010-2015 period. Future research can use primary data to examine the effects of these funds on capital expenditures in a more comprehensive manner.

Q: What are the limitations of the data used in this study?

A: The limitations of the data used in this study are that it only includes data from 33 local governments during the 2010-2015 period. The data may not be representative of all local governments in Indonesia.

Q: What are the implications of the findings of this study for future research?

A: The implications of the findings of this study for future research are that it highlights the need for further research on the effects of regional revenues, profit sharing funds, general allocation funds, and special allocation funds on capital expenditures in local governments in Indonesia. Future research can also examine the effects of other variables on capital expenditure, such as the quality of governance and the level of corruption.