Financial Performance Effect on Economic Growth in Special Autonomy Province

Abstract

Seeing the ability of the region in carrying out Regional Autonomy, one of which can be measured through regional financial performance. The low financial performance in the provinces of Aceh and Papua has led to unstable and volatile economic growth. The instability of economic growth in Aceh Province will trigger economic and social problems. The purpose of this study was to analyze the effect of financial performance consisting of independence ratios, effectiveness ratios, efficiency ratios, and PAD growth on the economic growth of special autonomy regions through capital expenditures using panel data path analysis. This research method uses path analysis method with panel data sourced from the Ministry of Finance DJPK from 2007 to 2021. The results showed that the independence ratio, effectiveness ratio, efficiency ratio, and PAD growth had a positive effect on the economic growth of special autonomy regions through capital expenditures. Capital expenditures for special autonomy provinces have a positive and significant impact on economic growth. The independence ratio, effectiveness ratio, efficiency ratio, and PAD growth of special autonomy provinces have a positive and significant influence on economic growth through capital expenditures.