Local Revenue, Capital Expenditure, and E-government Impact on the Financial Performance

Abstract

The objective of this study is to analyze the impact of local revenue, e-government, and capital expenditure on the financial performance of local government and how e-government mediates the effect of local revenue on financial performance. The population of this study includes 29 regencies and 6 cities in the Central Java Province, Indonesia. The purposive sampling technique was utilized to compile 76 samples. Descriptive statistical analysis and partial least squares testing with structural equation modeling were used for data analysis. The results indicate that local revenue has no significant impact on financial performance, while e-government has a positive effect, and capital expenditure has a negative effect. Moreover, local revenue has a positive impact on e-government, and e-government mediates the effect of local revenue on local government financial performance. In conclusion, this study emphasizes the importance of establishing effective budgets to improve regional revenue and invest in e-government for local governments.

Keywords

• capital expenditure
• e-government
• financial performance
• local revenue
• public finance