ANALYSIS OF LOCAL OWN REVENUE AND BALANCING FUNDS ON THE FINANCIAL PERFORMANCE

Abstract

Regional Original Income (PAD) and Balanced Fund are indicators of Regional Income which are used as benchmarks for measuring the level of independence of an area. The higher the level of Regional Original Revenue (PAD) realization, the higher the possibility of a region being able to finance financing in its region. Conversely, the higher the realization of the Balancing Fund in a region, the higher the level of possibility that the region will depend on the central government. The purpose of this study is to analyze local revenue and balance funds on the financial performance of districts and cities in the province of East Java. The data analysis method used is multiple linear regression analysis by looking at the partial influence of the Local Own Income and Balanced Fund variables on the financial performance. The results of the study indicate that the Regional Original Income (PAD) has no significant effect on the financial performance of local governments either. Balanced funds have a significant effect on financial performance. Regional Original Income (PAD) has no significant effect on government financial performance, which means that an increase in Regional Original Income (PAD) is not able to improve the financial performance of local governments. Meanwhile, the Balancing Fund has a negative effect on the financial performance of the regional government which results in an increase in the Balancing Fund which reduces the financial performance of the regional government.