The Effects of Local Own-Source Revenue, General Allocation Fund, Special Allocation Fund, and Revenue-Sharing Fund on Local Government Financial Performance in Six Papua Provinces, Indonesia (2023)

Abstract

This study examines the statistical associations of Local Own-Source Revenue (PAD), the General Allocation Fund (DAU), the Special Allocation Fund (DAK), and the Revenue-Sharing Fund (DBH) with the financial performance of regency and municipal governments in six Papua provinces during the 2023 fiscal year. The study used a quantitative, nonexperimental, cross-sectional explanatory design and included all 42 regency and municipal governments in Papua, Central Papua, Highland Papua, South Papua, West Papua, and Southwest Papua. We compiled secondary data from audited local government financial statements, budget-realization reports, and transfer records from official government sources, and analyzed them using multiple linear regression in IBM SPSS Statistics 29. Financial performance was proxied by the PAD effectiveness ratio, while PAD, DAU, DAK, and DBH were expressed as proportions of total regional revenue. PAD (B = 0.156, p = 0.041) and DBH (B = 0.479, p < 0.001) were positively and significantly associated with financial performance; DAU showed a positive but insignificant association (B = 0.015, p = 0.747), whereas DAK showed a negative and significant association (B = -0.737, p < 0.001). The model was jointly significant (F = 201.831, p < 0.001; adjusted R² = 0.951). The high explanatory power must be interpreted cautiously because realized PAD appears in both the PAD predictor and the PAD-effectiveness outcome, creating potential mechanical overlap. The findings therefore indicate strong cross-sectional associations rather than causal effects. They show that transfer instruments cannot be treated as homogeneous: their relationship with financial performance varies according to fiscal autonomy, earmarking, revenue-sharing bases, and local management capacity.