Financing Rural Futures: Governance and Contextual Challenges of Village Fund Management in Underdeveloped Regions

Ari Warokka (), Vetaroy Warokka and Aina Zatil Aqmar
Additional contact information
Ari Warokka: Global Business Department, Busan International College, Tongmyong University, Busan 48520, Republic of Korea
Vetaroy Warokka: Ministry of Population and Family Development, Jayapura 99225, Indonesia
Aina Zatil Aqmar: Prosemora Consulting, Central Jakarta, Jakarta 10440, Indonesia

JRFM, 2025, vol. 18, issue 11, 1-23

Abstract: Effective management of village funds is central to financing sustainable and equitable rural futures, particularly in underdeveloped and resource-diverse regions such as Papua, Indonesia. This study explores the governance factors that shape the sustainability of village fund management (VFM) by examining institutional, financial, and socio-cultural dimensions across 212 villages. Primary data from village heads and secondary data on village-owned enterprises (BUMDes) and 2024 village fund allocations were analyzed using exploratory factor analysis (EFA), partial least squares structural equation modeling (PLS-SEM), and multi-group analysis (MGA). Seven key governance constructs emerged, with ethical governance, implementation capacity, mandatory disclosure and reporting, community participation, and financial management capacity demonstrating significant positive effects on sustainable VFM outcomes. In contrast, perceived social and economic impacts were negatively associated with performance, and planning quality exerted an influence only under specific contextual conditions. These relationships proved highly context-dependent, varying by geography, natural resource availability, transport accessibility, and demographic composition. The findings underscore the need for adaptive and context-sensitive governance strategies to strengthen institutional resilience, enhance fiscal equity, and maximize the developmental impact of village funds in underdeveloped rural regions.

Keywords: village fund management; governance; rural finance; underdeveloped regions; village-owned enterprises; sustainable development; institutional resilience; Papua (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1911-8074/18/11/603/pdf (application/pdf)
https://www.mdpi.com/1911-8074/18/11/603/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:18:y:2025:i:11:p:603-:d:1780942

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().