The Effect of Local Government Size and Capital Expenditure on Local Government Financial Performance

Muzzammil Ihza Mahendra (), Asri Usman and Amiruddin Junus
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Muzzammil Ihza Mahendra: Hasanuddin University
Asri Usman: Hasanuddin University
Amiruddin Junus: Hasanuddin University

A chapter in Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024), 2025, pp 1250-1262 from Springer

Abstract: Abstract This study aims to test and analyse the effect of local government size and capital expenditure on local government financial performance in Bantaeng Regency for the period 2019 - 2023. The object of this research is the financial performance of the Bantaeng Regency local government in the 2019-2023 period. Local government financial performance can be analysed using effectiveness ratios. The data analysis technique used is multiple linear regression analysis. The results of data analysis show that local government size has a negative effect on local government financial performance. This shows that the size of local government size has a positive and significant effect on financial performance. The results of the analysis indicate that an increase in the size of local government, as measured by total assets or budget, has potential to improve financial performance. This confirms the importance of capacity and resources managed by local governments in achieving efficiency and effectiveness in financial management. Capital expenditure also has a positive and significant effect on financial performance. An increase in capital expenditure allocated to infrastructure investment and fixed assets shows a positive impact on financial performance, as better infrastructure can improve public services and support regional economic growth.

Keywords: size; capital expenditure; financial performance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-758-8_102

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DOI: 10.2991/978-94-6463-758-8_102

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