ANALYSIS OF FACTORS THAT INFLUENCE THE INDEPENDENCE OF REGIONAL FINANCE IN WEST NUSA TENGGARA PROVINCE

Abstract

This study analyzes the factors that influence the financial independence of the regencies or cities in the province of West Nusa Tenggara (NTB). The research variables used in this study is Per-capita Regional Revenue (PAD), Per-capita Fiscal Balance Funds, Per-capita Gross Domestic Product, population and regional financial independence. The analysis tool uses multiple regression models and Ordinary least Square (OLS) method. While, the data used is a data panel Regency or Cites in NTB for the last 5 years. The results of the analysis show that the PAD variable shows a positive and significant effect on regional financial independence. Fiscal Balance Funds variables have a negative and significant effect on regional financial independence. This is because Local Government reached 70 percent fund from the central government during the study period. The variable per capita GRDP does not have a positive and insignificant effect on regional financial independence. It causes by low contribution of the main sectors to the formation of GRDP which the mainstay of the regency or cities governments in the NTB province are, such as agriculture, plantation, agriculture, mining and excavation. The variable number of residents is not positive and not significant towards regional financial independence. Lower people's purchasing power will reduce the amount of goods and services purchased that effect to reducing the amount of money for the region.

Keywords

• Per-capita regional revenue
• per-capita fiscal balance funds
• per-capita regional gross domestic product
• population
• multiple regression