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Abstract
This study aims to examine the effect of Local Own Source Revenue , Capital Expenditure , Dependency Level, and Fiscal Balance Funds on Local Government Financial Performance, with Financial Health as a moderator variable . The research was conducted on regency and municipal governments in Central Java Province using Local Government Financial Statements for the 2022–2024 period . A quantitative approach with a causal research design was employed . The sampling technique used was saturated sampling, in which all regency and municipal governments in Central Java Province were included as research Samples . Data were analyzed using multiple linear regression and moderated regression analysis , preceded by classical assumption tests to ensure the validity of the regression model. The results indicate that Local Own Source Revenue has a positive and significant effect on Local Government Financial Performance, while Capital Expenditure does not have a significant effect . The Dependency Level has a negative effect on Local Government Financial Performance, indicating that higher dependence on central government transfers tends to reduce financial Fiscal performance Balance Funds are found to have a significant effect on Local Government Financial Performance, reflecting their important role in supporting regional fiscal capacity . Furthermore , the moderated regression analysis shows that Financial Health does not moderate the relationship between Local Own Source Revenue , Capital Expenditure , Dependency Level, and Fiscal Balance Funds on Local Government Financial Performance. These findings suggest that improvements in local government financial performance is not solely determined by financial health conditions , but are also influenced by the effectiveness of revenue management and fiscal policy implementation at the regional level. This study is expected to contribute to the empirical literature on public sector accounting and provide insights for local governments in formulating more effective and sustainable financial management policies .
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References
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- Andirfa , M., Basri, H., & Majid, MSA (2016). The effect of capital expenditure and local revenue on performance. Journal of Master of Accounting, 5 , 330–338.
- Andriana, N. (2020). The influence of balancing funds and capital expenditures on regional independence. Journal of Taxation and State Finance (PKN), 1 (2), 105–113. https://doi.org/10.31092/jpkn.v1i2.793
- Antari, NPGS, & Sedana, IBP (2018). The influence of local revenue and capital expenditure on local government financial performance. E-Journal of Management, Udayana University, 7 (2), 1080. https://doi.org/10.24843/ejmunud.2018.v7.i02.p19
- Atmoko, CA, & Khairudin, K. (2022). The impact of regional revenue and capital expenditure on local government financial performance. Scientific Journal of Unitary Accounting, 10 (2), 291–296. https://doi.org/10.37641/jiakes.v10i2.1295
- Aulia, R., & Rahmawaty, R. (2020). The influence of local government prosperity, local government size, and the level of local government dependence on the financial performance of district/city governments in Aceh Province. Scientific Journal of Accounting Economics Students, 5 (4), 584–598. https://doi.org/10.24815/jimeka.v5i4.16826
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- Monica. (2023). Factors influencing the financial health of local governments in West Sumatra Province. Research & Accounting Journal, 7 (2).
- Government Regulation of the Republic of Indonesia. (2010).
- Putri, ST, & Priyadi, MP (2021). The effect of leverage , balancing funds, and capital expenditure on local government financial performance. Journal of Accounting Science and Research, 10 (9), 1–16.
- Rahmadhanty , DR, & Firmansyah, A. (2025). Moderation of financial report quality on independence, dependence, and capital expenditure on regional performance. 6 (2), 327–343.
- Saputri, SH, & Kurnia. (2020). The influence of balancing funds, regional spending, and regional original income on regional financial performance. Journal of Accounting Science and Research, 9 (1), 1–21.
- Sari, BI, & Halmawati. (2021). The influence of local revenue, general allocation funds, and regional expenditure on the financial performance of district/city governments in West Sumatra Province. Journal of Accounting Exploration, 3 (1), 1–11.
- Sarkoro , H., & Zulfikar. (2016). Human development: An empirical study of provincial governments across Indonesia in 2012–2014. Indonesian Accounting and Finance Research, 1 , 54–63.
- Setiani, I., & Ismunawan . (2022). The influence of unemployment, economic growth, poverty and level of dependency on the financial performance of local governments. JEMBA: Journal of Economics, Management, Business and Accounting, 1 (3), 261–276.
- Thalib, F., & Ekaningtias , D. (2019). The influence of local revenue, balancing funds, and capital expenditure on local government financial performance. Indonesian Accounting Journal, 9 (1), 39–49.
- Wahyudin, I. (2020). The influences of original local government revenue , fiscal balance transfer and capital expenditure on the financial performance of local government of regencies and cities in West Java Province . Indonesian Accounting Research Journal , 1 (1), 86–97.
- Wiguna, KY (2015). The influence of local revenue, general allocation funds, and local government capital expenditure on the financial performance of district/city governments in South Sumatra. Fordema , 12 (1), 1–50.
References
Adiyar , SR, & Wijayanti, P. (2025). Characteristics and financial performance of local governments: A study of district/city governments in Central Java. September .
Andirfa , M., Basri, H., & Majid, MSA (2016). The effect of capital expenditure and local revenue on performance. Journal of Master of Accounting, 5 , 330–338.
Andriana, N. (2020). The influence of balancing funds and capital expenditures on regional independence. Journal of Taxation and State Finance (PKN), 1 (2), 105–113. https://doi.org/10.31092/jpkn.v1i2.793
Antari, NPGS, & Sedana, IBP (2018). The influence of local revenue and capital expenditure on local government financial performance. E-Journal of Management, Udayana University, 7 (2), 1080. https://doi.org/10.24843/ejmunud.2018.v7.i02.p19
Atmoko, CA, & Khairudin, K. (2022). The impact of regional revenue and capital expenditure on local government financial performance. Scientific Journal of Unitary Accounting, 10 (2), 291–296. https://doi.org/10.37641/jiakes.v10i2.1295
Aulia, R., & Rahmawaty, R. (2020). The influence of local government prosperity, local government size, and the level of local government dependence on the financial performance of district/city governments in Aceh Province. Scientific Journal of Accounting Economics Students, 5 (4), 584–598. https://doi.org/10.24815/jimeka.v5i4.16826
Azhar, I. (2021). The influence of local revenue on the financial performance of the Langsa City government. Journal of Administrative Transformation, 11 (2), 164–174. https://doi.org/10.56196/jta.v11i02.190
Desky, D.A., Erlina, E., & Sirozuzilam , S. (2023). The influence of balancing funds and capital expenditures on the financial performance of districts/cities in Aceh Province. Trias Politika Journal, 7 (1), 47–60. https://doi.org/10.33373/jtp.v7i1.5064
Digdowiseiso , K., Subiyanto, B., & Cahyanto, RD (2022). The influence of local revenue, balancing funds, and capital expenditure on local government financial performance. Fair Value : Scientific Journal of Accounting and Finance, 4 (6), 2572–2580.
Dona, EM, & Lestari, VA (2020). Analysis of budget realization reports to assess financial performance at the Regional Revenue Agency Office of OKU Regency. Balance : Journal of Accounting and Business, 5 (2), 135. https://doi.org/10.32502/jab.v5i2.2877
Firmansyah, A., Arfiansyah, Z., & Huda, AM (2024). The moderating role of financial health level. Journal of Accounting Analysis, 13 (2), 85–94. https://doi.org/10.15294/aaj.v13i2.1894
Fitriani, N., & Syarif, D. (2025). The influence of local revenue and capital expenditure on financial performance in the West Halmahera Regency Government. Economics and Finance, 7 (1), 164–174. https://doi.org/10.32877/ef.v7i1.2111
Hutauruk, MFM (2024). The influence of PAD and capital expenditure on the financial performance of district/city governments in North Sumatra Province. 8 , 42932–42939.
Irwan Moridu . (2021). Efficiency and effectiveness of local revenue receipts in Banggai Regency. Sinar Manajemen Journal, 8 (2), 90–97. https://doi.org/10.56338/jsm.v8i2.1643
Maulina, A., Alkamal , M., & Fahira, NS (2021). The influence of work experience, job performance, education, and training on career development . Journal of Information Systems, Applied , Management , Accounting and Research , 5 (2). https://doi.org/10.52362/jisamar.v5i2
Monica. (2023). Factors influencing the financial health of local governments in West Sumatra Province. Research & Accounting Journal, 7 (2).
Government Regulation of the Republic of Indonesia. (2010).
Putri, ST, & Priyadi, MP (2021). The effect of leverage , balancing funds, and capital expenditure on local government financial performance. Journal of Accounting Science and Research, 10 (9), 1–16.
Rahmadhanty , DR, & Firmansyah, A. (2025). Moderation of financial report quality on independence, dependence, and capital expenditure on regional performance. 6 (2), 327–343.
Saputri, SH, & Kurnia. (2020). The influence of balancing funds, regional spending, and regional original income on regional financial performance. Journal of Accounting Science and Research, 9 (1), 1–21.
Sari, BI, & Halmawati. (2021). The influence of local revenue, general allocation funds, and regional expenditure on the financial performance of district/city governments in West Sumatra Province. Journal of Accounting Exploration, 3 (1), 1–11.
Sarkoro , H., & Zulfikar. (2016). Human development: An empirical study of provincial governments across Indonesia in 2012–2014. Indonesian Accounting and Finance Research, 1 , 54–63.
Setiani, I., & Ismunawan . (2022). The influence of unemployment, economic growth, poverty and level of dependency on the financial performance of local governments. JEMBA: Journal of Economics, Management, Business and Accounting, 1 (3), 261–276.
Thalib, F., & Ekaningtias , D. (2019). The influence of local revenue, balancing funds, and capital expenditure on local government financial performance. Indonesian Accounting Journal, 9 (1), 39–49.
Wahyudin, I. (2020). The influences of original local government revenue , fiscal balance transfer and capital expenditure on the financial performance of local government of regencies and cities in West Java Province . Indonesian Accounting Research Journal , 1 (1), 86–97.
Wiguna, KY (2015). The influence of local revenue, general allocation funds, and local government capital expenditure on the financial performance of district/city governments in South Sumatra. Fordema , 12 (1), 1–50.