He ian i, E a; Ma undha, Amo
A icle
Examining he e ec s o iscal decen aliza ion and income
inequali y on he economic pe o mance o wes Suma a
p o ince, Indonesia
Global Business & Finance Re iew (GBFR)
P o ided in Coope a ion wi h:
People & Global Business Associa ion (P&GBA), Seoul
Sugges ed Ci a ion: He ian i, E a; Ma undha, Amo (2024) : Examining he e ec s o iscal
decen aliza ion and income inequali y on he economic pe o mance o wes Suma a p o ince,
Indonesia, Global Business & Finance Re iew (GBFR), ISSN 2384-1648, People & Global Business
Associa ion (P&GBA), Seoul, Vol. 29, Iss. 7, pp. 63-77,
h ps://doi.o g/10.17549/gb .2024.29.7.63
This Ve sion is a ailable a :
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I. In oduc ion
Income inequali y, ypically measu ed using he
Gini Ra io, has dec eased o e he pas decade in
Indonesia. Howe e , he COVID-19 pandemic has
exace ba ed he le el o income inequali y in Wes
Suma a due o he coun y's economic down u n
esul ing in dec eased na ional e enue and egional
Recei ed: May. 24, 2024; Re ised: Jun. 20, 2024; Accep ed: Jul. 21, 2024
† Co esponding au ho : E a He ian i
E-mail: e a.he ian [email protected]
expendi u e ell signi ican ly. These dispa i ies, oo ed
in a ia ions in inancial po en ial and managemen
ac oss egions (F. D. P. San oso & Mukhlis, 2021).
Income inequali y can cause social injus ice, ension,
and inc ease dispa i ies be ween g oups in socie y.
I can also impac social mobili y, social s abili y,
and economic g ow h in he long e m (Bhagaska a,
2023). One o he main ac o s ha de e mine po e y
is income dis ibu ion, because po e y is de e mined
by he a e age pe capi a expendi u e o he popula ion
ha is below he po e y line, i can be concluded
ha an inc ease in income inequali y caused by a
GLOBAL BUSINESS & FINANCE REVIEW, Volume. 29 Issue. 7 (AUGUST 2024), 63-77
pISSN 1088-6931 / eISSN 2384-1648 H ps://doi.o g/10.17549/gb .2024.29.7.∣63
ⓒ2024 People and Global Business Associa ion
GLOBAL BUSINESS & FINANCE REVIEW
www.gb jou nal.o g
o inancial sus ainabili y and people-cen e ed global business1)
Examining he E ec s o Fiscal Decen aliza ion and Income Inequali
y
on he Economic Pe o mance o Wes Suma a P o ince, Indonesia
E a He ian i
a†
, Amo Ma undha
b
aUni e si as Muhammadiyah Jaka a
bUni e si as Bhayangka a Jaka a Raya
A
B S T R A C T
Pu pose: The issue o income inequali y in a ious egions o Indonesia is a signi ican na ional conce n ha
equi es immedia e a en ion. Despi e he go e nmen 's e o s h ough iscal decen aliza ion policies, inequali y
pe sis s. This s udy decisi ely explo es he impac o iscal decen aliza ion and egional income inequali y on
egional inancial pe o mance.
Design/me hodology/app oach: The esea ch sample comp ises 19 dis ic s/ci ies in Wes Suma a p o ince, wi h
da a om 2018 o 2020 sou ced om he Minis y o Finance and he Cen al S a is ics Agency o Wes Suma a
P o ince. The analy ical app oach u ilized in his s udy is he Sma PLS e 3.2 model.
Findings: The i s esea ch inding indica es ha iscal decen aliza ion has a posi i e and subs an ial impac on
egional inancial pe o mance. A second inding sugges s ha egional income inequali y also posi i ely and sig-
ni ican ly a ec s egional economic pe o mance.
Resea ch limi a ions/implica ions: These esul s en ich he pe spec i e o Ros ow's s ages o economic g ow h
model om a di e en s andpoin .
O iginali y/ alue: This s udy con ibu es o a deepe comp ehension o he ields o economics, poli ics, and social
sciences, pa icula ly wi hin he speci ic con ex o he p o ince o Wes Suma a in Indonesia.
Keywo ds: Fiscal Decen aliza ion, Income Inequali y, Ros ow Model, Wes Suma e a
Copy igh : The Au ho (s). This is an Open Access jou nal dis ibu ed unde he e ms o he C ea i e Commons A ibu ion
ⓒ
N
on-Comme cial License (h ps://c ea i ecommons.o g/licenses/by-nc/4.0/) which pe mi s un es ic ed non-comme cial use, dis ibu ion
,
and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed.
GLOBAL BUSINESS & FINANCE REVIEW, Volume. 29 Issue. 7 (AUGUST 2024), 63-77
64
dec ease in he le el o labo income indi ec ly a ac s
popula ion g oups ha ini ially ha e a e age
expendi u e abo e he po e y line o a e age
expendi u e below he po e y line (Masku e al.,
2023). Basically, he pe cen age le el o he poo
in Indonesia is in luenced by income inequali y, open
unemploymen , go e nmen spending, o he human
de elopmen index. Con e sely, inc easing economic
g ow h equi es po e y educ ion e o s ha depend
on he e ec s o income inequali y (Supa man, 2021).
Indonesia's economic g ow h be o e COVID-19
om 2010 o 2019 ended o decline. In 2020, he
COVID-19 pandemic en e ed Indonesia, causing
economic g ow h o all e en u he o -2.07%,
indica ing ha he COVID-19 pandemic has a ec ed
Indonesia's economic g ow h and na ional de elopmen
(Widias u i & Sil iana, 2021).
Each o de elopmen oppo uni ies can be mo e
e enly u ilized ac oss egions, hus impac ing he
de elopmen p ocess in de eloped a eas. This
app oach will help educe economic dispa i ies
be ween egions, add ess income inequali y wi hin
economic sec o s, ackle low incomes among
indi iduals o g oups, comba unemploymen , add ess
isola ed a eas, imp o e he quali y o human esou ces
(HR), and add ess en i onmen al challenges. These
a e signi ican challenges o s akeholde s, including
local and cen al go e nmen s, he p i a e sec o ,
and he communi y, who mus wo k oge he in
syne gy o ind solu ions. The e iden dispa i y in
pe capi a income be ween dis ic s and ci ies signals
unequal de elopmen and in es men policies o an
imbalance ha equi es equi able dis ibu ion o
de elopmen o ensu e mo e e en inc eases in pe
capi a income. S udies by Damanik e al (2018) and
Ma ondang (2018) ound ha economic g ow h and
popula ion size can impac income inequali y.
Policies aimed a os e ing economic de elopmen
ha e inad e en ly wo sened egional economic
dispa i ies. Va ious ac o s con ibu e o unequal
wel a e ac oss di e en egions, as e idenced by he
Human De elopmen Index (HDI). The dispa i ies
esul om egional di e ences, de elopmen issues
in Wes Suma a, and pa icula ly challenges in he
heal h and in as uc u e sec o s (Ramadhani &
U omo, 2023). The co e ea u e o egional au onomy
is i s abili y o demons a e inancial po en ial,
decen aliza ion, and e ec i e inancial managemen .
The dis ibu ion o income and iscal decen aliza ion
signi ican ly impac egional inancial pe o mance.
Income inequali y in de eloping coun ies o en does
no adequa ely conside i s egional dimensions. This
is c ucial because e o s o educe income inequali y
na ionally will only succeed in con ex s whe e highly
unequal egions coexis wi h economically ela i ely
equal egions (Sa oia, 2020).
The expanded au ho i y o egional au onomy
allows Regional Go e nmen s o independen ly
manage hei inances by decen alizing unding o
he egions. I is c ucial o local go e nmen s o
anspa en ly and accoun ably manage hese unds
o ensu e p ope alloca ion and u iliza ion. Fiscal
decen aliza ion is i al o enhancing socie al wel a e
by e ec i ely managing egional inances (Rahman &
Sapu a, 2022).
In 2022, he ealiza ion o Local Own Sou ce
Re enue (PAD) o Wes Suma a P o ince eached
2,848,207,032,876 IDR, ma king an inc ease o 11.6%
o app oxima ely 296 billion IDR compa ed o he
p e ious yea . PAD in ha yea con ibu ed he la ges
sha e o egional income, amoun ing o 46.52%. Local
axes we e he la ges con ibu o , comp ising 79.86%,
ollowed by O he Legi ima e Local Re enues a
16.19%, Income om he Managemen o Sepa a ed
Regional Weal h a 3.53%, and Local Le ies a 0.42%.
The Indonesian go e nmen has implemen ed a
pe o mance-based budge sys em o imp o e egional
inancial managemen 's e ec i eness, e iciency,
anspa ency, and accoun abili y (Khan, 2024).
The esea ch is pa icula ly imely gi en he high
dispa i y in income dis ibu ion be ween u ban and
u al a eas in Wes Suma a, Indonesia, a end
mi o ed in o he Indonesian ci ies. This s udy aims
o assess how iscal decen aliza ion and egional
income inequali y impac he inancial pe o mance
o he Dis ic Go e nmen s o Wes Suma a P o ince.
E a He ian i, Amo Ma undha
65
A. Li e a u e Re iew and Hypo hesis
De elopmen
1. Ros ow's Model o De elopmen
Ros ow (1960) p oposed a de elopmen heo y
ou lining a i e-s age p ocess o a de eloping coun y
o achie e de eloped s a us. These s ages a e (1)
adi ional socie y, cha ac e ized by a limi ed
communi y s uc u e and low pe capi a income; (2)
he p econdi ions o ake-o , ma ked by he
ansi ion o he middle class owa ds a mo e mode n
socie y wi h an ad anced economic sys em; (3) he
ake-o s age, ep esen ing an e a o economic
de elopmen whe e obs acles o g ow h gi e way
o o ces o p og ess, leading o a signi ican inc ease
in in es men ; (4) he d i e o ma u i y, de ined by
con inuous and egula economic g ow h u ilizing
mode n echnology; and (5) he age o high mass
consump ion, whe e he leading sec o s o socie y
shi owa ds du able consume goods and se ices.
Acco ding o his heo y, his economic de elopmen
ansi ion is d i en by economic, poli ical, and social
o ien a ion changes and shi s in people's a i udes
and cus oms owa ds economic de elopmen .
2. Fiscal Decen aliza ion
To implemen iscal decen aliza ion, sou ces o
local go e nmen unding a e designed mo e equi ably.
I educes poli ical con lic be ween he cen al and
local go e nmen s and p o ides local go e nmen
ope a ional unds consis ing o local axes and le ies,
as well as cen al and local go e nmen balancing
unds om he APBN (Sinaga, 2023). This shi in
go e nmen au ho i y has signi ican implica ions o
budge adminis a ion and iscal decen aliza ion,
pa icula ly ega ding he esponsibili ies o dis ic ,
ci y, and p o incial go e nmen bu eauc acies in
Indonesia. The sen ence Fiscal decen aliza ion is
cha ac e ized by he au onomy o local go e nmen s in
managing egional inances, g an ing hem disc e ion
o alloca e unds based on egional p io i ies.
Regional au onomy e e s o sel -go e ning
egions' igh s, au ho i y, and obliga ions o se e
local communi ies in line wi h s a u o y egula ions.
This au onomy is ecommended o enhance he
e iciency, e ec i eness, and accoun abili y o inancial
managemen in local go e nmen , as highligh ed by
Has ho o and Suna di in 2016 o enhance Indonesia
go e nmen policy. As local go e nmen unde ake
iscal decen aliza ion, hey a e expec ed o ha e he
independence o inance egional expendi u es and
pu sue de elopmen sepa a e om he cen al
go e nmen (Iskanda e al., 2021).
3. Regional Income Inequali y
Hakim & Rosini (2022) explained ha income
inequali y e e s o he di e ence in income le els
among indi iduals, speci ically be ween high and low
incomes. Fu he mo e, he incep ion o he p oblem
o egional dispa i y indica es di e ences in wel a e
le els, so i can be said ha apid g ow h occu s
in some egions while slow g ow h in o he s, bo h
o which a e caused by he unique cha ac e is ics
o each egion (As ahmaulyana, 2023). co up ion
can educe go e nmen spending on educa ion, heal h,
and inal consump ion, as his lea es ewe esou ces
a ailable o social spending. Thus, i can be
concluded ha , inc eased co up ion has wo sened
he posi ion o he poo es . inc eased co up ion will
inc ease income inequali y (Sa i & Qib hiyyah, 2022).
San (1983) iden i ies h ee aspec s on which egional
income inequali ies can be based: egional income
dispa i y, u ban- u al income dispa i y, and size
dis ibu ion o income.
Inequali y is a majo p oblem o almos e e y
coun y, especially de eloping coun ies. Inequali y
in dis ibu ion can lead o dispa i ies h oughou
socie y. P o iding equal oppo uni ies o each
communi y o u ilize he a ailable social acili ies
and p o iding equal oppo uni ies o each communi y
o de elop and imp o e i s economy a e he main
keys in e o s o o e come socioeconomic dispa i ies
(Silpia, 2023).
GLOBAL BUSINESS & FINANCE REVIEW, Volume. 29 Issue. 7 (AUGUST 2024), 63-77
66
4. Regional Financial Pe o mance
All local go e nmen s in he ci ies o Suma a
Island demons a es a signi ican le el o inancial
dependency on unds ecei ed om he cen al
go e nmen , p o incial go e nmen , and o he dis ic s.
This high dependency e lec s a s ong eliance on
ex e nal assis ance o suppo egional go e nance
and de elopmen ac i i ies. This is e idenced by he
ac ha he con ibu ion o ans e income exceeds
50% o he o al e enue o each dis ic o ci y
in he egion (Abdullah & Ma da illah, 2017).
Va ious ac o s, including go e nmen policies,
he economic si ua ion, and egula ions go e ning
egional inancial managemen , a ec egional
inancial pe o mance. Imp o ing e iciency,
independence, decen aliza ion, e ec i eness, and
egional dependence can help egional inancial
pe o mance (Sa ika, 2019). Fu he mo e, By using
p ede e mined inancial indica o s, egional inancial
pe o mance can be de ined as he le el o
achie emen o egional wo k esul s ha aim o
de e mine how well and e ec i ely he egion
manages inances (Sai izal, 2022).
5. Fiscal Decen aliza ion and Regional Financial
Pe o mance
In Indonesia, iscal decen aliza ion plays a c ucial
ole in implemen ing he p inciples o egional
au onomy aimed a imp o ing communi y wel a e
based on local po en ials, despi e acing a ious
challenges. Ini ially, iscal decen aliza ion in Indonesia
aimed o p omo e economic independence a he local
le el. As a esul , egions we e g an ed b oad au ho i y
in a ious sec o s excep o o eign a ai s, de ense,
secu i y, jus ice, inance, and eligion. In he con ex
o egional au onomy, iscal decen aliza ion is
conside ed a signi ican second s ep. The package
o S a e Finance Laws, which includes h ee s a e
inance egula ions, has implemen ed e o ms in
na ional inancial policy o suppo his p ocess
(Ch is ia & Isp iya so, 2019).
Fiscal decen aliza ion in ol es ans e ing
inancial esponsibili ies om he cen al go e nmen
o egional o local go e nmen s, which is known
o impac o e all inancial pe o mance signi ican ly.
This can be obse ed h ough he le el o au onomy
o he cen al go e nmen in handling egional
inances and he educed eliance on he cen al
go e nmen . Wi h less dependence on he cen al
go e nmen , local adminis a ions can independen ly
manage inancial ope a ions, o e see, and exploi
inancial oppo uni ies, and handle budge ing and
alloca ion. To imp o e local inancial capabili y, local
go e nmen s mus ha e he abili y o suppo he
inancing o go e nmen , de elopmen , and communi y
ac i i ies. In addi ion, hey mus encou age he
communi y o pa icipa e in egional de elopmen
and manage local e enue e ec i ely and e icien ly
(R. T. San oso e al., 2021). The e o e, building upon
exis ing heo y and esea ch, he ini ial hypo hesis
p esen ed in his s udy is:
H1:
Fiscal Decen aliza ion has a posi i e e ec
on egional inancial pe o mance.
6. Regional Income Inequali y and Regional Financial
Pe o mance
Income inequali y measu es how income is
dis ibu ed among people in a speci ic a ea o egion
du ing a speci ic ime. This end o inc easing income
inequali y is obse ed a a ious le els in Indonesia,
including u al, u ban, na ional, and p o incial le els.
In u ban a eas, income inequali y is mo e p onounced
han in u al a eas, which has implica ions o egional
economic pe o mance and public us in he
go e nmen . Income inequali y is closely linked o
po e y, and educing income dis ibu ion inequali y
o income le el gaps will ine i ably be a op p io i y
in economic de elopmen (Wulada i e al., 2022).
Hanum & Muda (2019) The ele a ed po e y a e
in he egion is a ibu ed o es ic ed access o
educa ion, wage dispa i ies, and he modes incomes
o ag icul u al wo ke s.
By ealloca ing egional expendi u es mo e
e ec i ely, i is possible o p omo e s onge and
mo e equi able economic g ow h, he eby add essing
he issue o income inequali y. Hence, in line wi h
E a He ian i, Amo Ma undha
67
exis ing heo ies and p e ious esea ch, he second
hypo hesis posi ed in his s udy is:
H2:
Regional income inequali y exe s a posi i e
impac on egional inancial pe o mance.
7. The E ec o Fiscal Decen aliza ion and Regional
Income Inequali y on Regional Financial Pe o mance
Fiscal decen aliza ion has he po en ial o enhance
e iciency in public and p oduc ion se ices.
Howe e , he implemen a ion o decen aliza ion
a ies ac oss di e en egions, leading o di e se
e ec s due o a ia ions in cha ac e is ics and
ins i u ions. Fiscal decen aliza ion is c ucial in
imp o ing egional inancial pe o mance and
educing income inequali y. Acco ding o Galb ai h
(2012), unequal dis ibu ion o de elopmen esul s
in income inequali y wi hin each egion, which, in
u n, hinde s economic g ow h and exace ba es
income inequali y .
The e exis s a co ela ion be ween inancial
pe o mance and egional income inequali y. Unequal
economic g ow h con ibu es o dec eased egional
income inequali y. Regional au ho i ies can
p oac i ely and inno a i ely manage egional
inances o os e g ow h. E iza (2014) examined
income inequali y among dis ic s, ci ies in Eas Ja a
P o ince and ound ha he Williamson index
indica es signi ican income inequali y, pa icula ly
in Kedi i and Su abaya. The Theil En opy Index
also con i ms a e y high-income inequali y in Eas
Ja a p o ince. Mo eo e , he in la ion a e posi i ely
and signi ican ly impac s egional income inequali y.
G ea e local e enue will make a egion mo e
independen in inancial managemen (Sa umaha &
Annisa, 2023). The e o e, based on exis ing heo y
and p e ious s udies, his s udy p oposes he hi d
hypo hesis:
H3:
Fiscal Decen aliza ion and Regional Income
Inequali y ha e a posi i e e ec on egional
inancial pe o mance.
II. Me hodology
This esea ch is a quan i a i e s udy ha examines
and e alua es he e ec o iscal decen aliza ion and
egional income inequali y on egional inancial
pe o mance wi h a concep ual amewo k as shown
in Figu e 1. Seconda y da a om go e nmen
ins i u ions such as he Cen al Bu eau o S a is ics
(BPS) o he ele an egions is he sou ce o his
esea ch. The equi ed da a a e G oss Regional
Domes ic P oduc (GRDP), APBD, and popula ion.
Re enue epo s o egional own-sou ce e enues
(PAD), cen al axes o egions, gene al alloca ion
H!
H2
Fi scal
Decen aliza ion
Re gi onal Income
Inequali y
Regional
Financial
Pe o mance
Figu e 1. Concep ual amewo k
GLOBAL BUSINESS & FINANCE REVIEW, Volume. 29 Issue. 7 (AUGUST 2024), 63-77
68
unds (DAU, and o he da a ele an o he esea ch
used om he APBD besides seconda y da a also
collec ed h ough li e a u e esea ch o suppo his
esea ch. This esea ch uses da a om 12 dis ic s
and 7 ci ies in Wes Suma a. This esea ch uses
he sma pls 3.2.2 analysis ool.
A. Da a Analysis Me hod
Desc ip i e s a is ics o e an o e iew o he da a
p o ile wi hin a esea ch sample. In his s udy,
desc ip i e s a is ics a e employed o p o ide
desc ip ions o he esponden s. These s a is ics a e
compu ed using Mic oso Excel o acili a e he
analysis. The s udy u ilizes he SEM echnique and
employs he Sma PLS 3.2.2 analysis ool o e alua e
wo models, namely he ou e and inne models.
1. The E alua ion o Measu emen Model (Ou e Model)
The ou e model is assessed o de e mine he
ela ionship be ween he la en cons uc and i s
indica o s. This model se es o es ablish he alidi y
and eliabili y o he esea ch ins umen s. The alidi y
es encompasses con e gen and disc iminan alidi y.
In assessing con e gen alidi y, his s udy employs
he loading ac o (Solling Hamid & M Anwa , 2019).
I s a ed ha a loading ac o alue > 0.50 is
p ac ically signi ican . Addi ionally, he c oss-loading
alue o each indica o wi hin a a iable di e s om
he indica o in o he a iables, wi h a loading alue
> 0.5. Fu he mo e, his s udy u ilizes C onbach's
alpha and composi e eliabili y o eliabili y es ing.
The Rule o humb dic a es ha he alues o
C onbach's alpha and composi e eliabili y mus
exceed 0.7 o he cons uc o a iable o pass he
eliabili y es (Chua, 2023).
2. The E alua ion o S uc u al Model (Inne Model)
In his s udy, he aim o e alua ing he inne model
is o sc u inize he esea ch hypo hesis. Acco ding
o Ha ono e al (2020), he e alua ion o he inne
model can be elucida ed by he R
2
alue o he
dependen a iable, pa h coe icien alue, o - alue
o a signi ican es be ween cons uc s in he inne
model. A high R
2
alue indica es a s ong p edic ion
model o his s udy. The pa h coe icien alue is
explica ed by -s a is ics and hen compa ed wi h he
- able alue in hypo hesis es ing. Fo he one- ailed
hypo hesis wi h an alpha o 5%, he - able alue
is 1.64 in he case o he media ion e ec . The
signi icance es pa ame e ou pu is de i ed om
he o al e ec able a he han he pa h coe icien
able. This is because he media ion e ec es s he
independen a iable's di ec impac on he dependen
a iable and examines he indi ec ela ionship
be ween he independen and dependen a iables
h ough he media ing a iable (indi ec e ec ).
The R
2
alue is 0.67 (s ong) 0.33 (mode a e) and
0.19 (weak) es ing he pa h coe icien indi idually
can be used es o es om he eg ession ou pu .
The p ima y objec i e o his esea ch is o analyze
he e ec s o iscal decen aliza ion and egional
income inequali y on he inancial pe o mance o
he Wes Suma a P o ince. This s udy seeks o del e
in o he ela ionship be ween hese ac o s and hei
in luence on he economic s abili y and g ow h o
he egion. The esea ch design speci ically add esses
he esea ch p oblems, objec i es, and hypo heses.
Employing a quan i a i e esea ch app oach, he s udy
u ilizes panel da a measu emen , comp ising
obse a ions ac oss 19 dis ic s/ci ies in Wes Suma a,
and inco po a es i e yea s o ime se ies da a
spanning om 2016 o 2020.
Acco ding o he ea lie concep ual a iables,
iden i ying esea ch in ol es wo independen a iables
and one dependen a iable, comp ising exogenous
and endogenous a iables. The exogenous a iables
a e ca ego ized as iscal decen aliza ion and egional
income inequali y, while he employed endogenous
a iable is egional inancial pe o mance. These
esea ch a iables a e p esen ed in Table 1 below.
This s udy inco po a es wo independen a iables
and one dependen a iable. The indica o s used o
Decen aliza ion Fiscal include he Indica o o
Regional Expendi u e, Regional Income, and Regional
E a He ian i, Amo Ma undha
69
Au onomy. Addi ionally, he s udy u ilizes indica o s o
Regional Income Inequali y, such as he Williamson
Index, Theil En opy Index, and Jamie Bone Index.
Fu he mo e, he s udy examines Regional Financial
Pe o mance using indica o s like Compa ibili y Ra io,
Independency Ra io, E iciency Ra io, E ec i eness
Ra io, Fiscal E o , and Regional Income G ow h
Ra e. De ailed explana ions o he measu emen o
each esea ch a iable can be ound in Table 2.
III. Resul s
A. The Ou e Model Resul
The esea che s pe o med a measu emen
assessmen (ou e model) o e alua e he alidi y and
eliabili y o he esea ch ins umen . Below is a
diag am illus a ing he pa h analysis (PLS algo i hm
Li e acy). The loading ac o alues o he indica o s
No Va iable Name Indica o Code Indica o s
1 Fiscal Decen aliza ion (X1)
DF 1
DF 2
DF 3
Indica o o Regional Expendi u e
Indica o o Regional Income
Indica o o Regional Au onomy
2 Regional Income Inequali y (X2)
KPD 1
KPD 2
KPD 3
Williamson Index
Theil En opy Index
Jamie Bone Index
3Regional Financial Pe o mance
(Y)
KKD 1
KKD 2
KKD 3
KKD 4
KKD 5
KKD 6
Compa ibili y Ra io
Independency Ra io
E iciency Ra io
E ec i eness Ra io
Fiscal E o
Regional Income G ow h Ra e
Sou ce: Da a P ocessed, 2022
Table 1. Resea ch objec based on esea ch a iables
Va iables Types o a iables Measu emen Va iable Measu emen
Scale
Fiscal
Decen aliza ion
(X1). (Halim, 2001)
Independen (X1)
TER = To al Expendi u es o Regency
TCGE = To al cen al go e nmen expendi u es
TDGR = To al Dis ic Go e nmen Re enue
TCGR = To al Cen al Go e nmen Re enue
TODR = To al O iginal Dis ic Re enue
TDR = To al Dis ic Re enue
Ra io
Regional Income
Inequali y (X2) Independen (X2)
KPD 1
Williamson Index
whe e:
Yi = GRP Nominal pe capi a a P o ince i
Y = A e age Pe Capi a Income in Wes Suma e a
Fi = To al Popula ion o Dis ic I
N = To al Popula ion in Wes Suma a P o ince
Ra io
Table 2. Ope a ional a iables
GLOBAL BUSINESS & FINANCE REVIEW, Volume. 29 Issue. 7 (AUGUST 2024), 63-77
70
o each alid and in alid esea ch a iable a e
p esen ed. Any in alid loading ac o alues will be
emo ed, wi h a minimum loading ac o o 0.50
being he benchma k. Following his, he diag am
will be e ised and e es ed mul iple imes o ensu e
imp o emen s in he esea ch model.
Va iables Types o a iables Measu emen Va iable Measu emen
Scale
KPD 2
Theil En opy Index
×
I = Theil En opy Index
Yj = GRP Nominal pe capi a a P o ince J
Y = GRP Nominal pe capi a a Wes Suma e a.
XJ = To al Popula ion o Dis ic j
X = To al Popula ion in Wes Suma a P o ince
KPD 3
Jamie Bone Index
Ii = Regional Inequali y in I a Yea
Yj = GRP Nominal pe capi a a P o ince J
Y = GRP Nominal pe capi a a Wes Suma e a P o ince
Regional Financial
Pe o mance (Y) Dependen (Y)
×
DECR = Dis ic Capi al Expendi u e Realiza ion
DER = Dis ic Expendi u e Realiza ion
×
RODR = Realiza ion o O iginal Dis ic Re enue
RRTR = Realiza ion o Regency T ans e Re enue
×
DER = Dis ic Expendi u e Realiza ion
DRR = Dis ic Re enue Realiza ion
×
RROI = Realiza ion o Regional O iginal Income
TROR = Ta ge o Regional O iginal Re enue
×
RROI = Realiza ion o Regional O iginal Income
DGRDP = Dis ic G oss Regional Domes ic P oduc
KKD 6
G ow h a e o Regional Income G ow h
– ×
In o ma ion:
R = G ow h Ra io
Pn = To al Regional Re enue o Regency, Ci y calcula ed
in he n h yea
Po = To al Income o Wes Suma a P o ince calcula ed
in he n h yea
Ra io
Sou ce: Da a P ocessed, 2022
Table 2. Con inued
E a He ian i, Amo Ma undha
77
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