Version 1
: Received: 13 June 2024 / Approved: 13 June 2024 / Online: 13 June 2024 (10:13:00 CEST)
How to cite:
Zein, M. H. M.; Muhtarom, M.; Septiani, S. Increasing Sustainable Economic Growth: Financial Performance and Capital Expenditures. Preprints2024, 2024060912. https://doi.org/10.20944/preprints202406.0912.v1
Zein, M. H. M.; Muhtarom, M.; Septiani, S. Increasing Sustainable Economic Growth: Financial Performance and Capital Expenditures. Preprints 2024, 2024060912. https://doi.org/10.20944/preprints202406.0912.v1
Zein, M. H. M.; Muhtarom, M.; Septiani, S. Increasing Sustainable Economic Growth: Financial Performance and Capital Expenditures. Preprints2024, 2024060912. https://doi.org/10.20944/preprints202406.0912.v1
APA Style
Zein, M. H. M., Muhtarom, M., & Septiani, S. (2024). Increasing Sustainable Economic Growth: Financial Performance and Capital Expenditures. Preprints. https://doi.org/10.20944/preprints202406.0912.v1
Chicago/Turabian Style
Zein, M. H. M., Muhtarom Muhtarom and Sisca Septiani. 2024 "Increasing Sustainable Economic Growth: Financial Performance and Capital Expenditures" Preprints. https://doi.org/10.20944/preprints202406.0912.v1
Abstract
The financial performance of local governments is closely related to the economic growth of a region. Strong financial performance provides a solid foundation for sustainable economic development. This study analyses the relationship between local government financial performance, capital expenditure, and sustainable economic growth in Banten Province. A quantitative approach was employed, using secondary data from Regional Revenue and Expenditure Budgets and economic growth statistics. Purposive sampling was utilised, and data analysis was conducted using Path Analysis. The findings reveal that several financial ratio variables significantly impact economic growth directly and indirectly through capital expenditure as a mediating variable. Directly, the independence ratio, effectiveness ratio, efficiency ratio, fiscal decentralisation ratio, dependency ratio, and capital expenditure significantly influence economic growth. The independence and effectiveness ratios have a positive impact, indicating that improvements in these variables directly foster economic growth. However, the efficiency and fiscal decentralisation ratios have a negative impact, suggesting that increases in these variables may reduce economic growth. Indirectly, through capital expenditure, the independence, effectiveness, dependency, and compatibility ratios significantly affect economic growth, with the independence ratio being the most dominant. Conversely, the fiscal decentralisation and efficiency ratios do not show significant indirect effects, indicating that capital expenditure is not an effective mediator for these variables.
Keywords
Financial Performance; Capital Expenditure; Economic Growth; Local Government; Fiscal Policy
Subject
Social Sciences, Government
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
