Effect of government investment and capital participation on local own-source revenue : the case of Indonesia

Abstract

This research aims to investigate the implications of regional asset growth, intangible assets and capital participation to the local revenue as a moderating variable. This study offers a new insight on examining the role of government income sources in improving the local government revenue, and by combining with quantitative method to examine the regional financial performance of West Java Provincial Government between 2012 and 2016. The study examines whether the capital participation of local government on the local state-owned enterprises influences the government income. This is considered interesting to examine, regarding the fact that there is a common perception that the duties of local government are only to exercise public service and run the central government policy. The sample used in this study includes the entire districts and municipalities that present information consistently during the research period. The data analysis was conducted using the Moderated Regression Analysis, which focus on the absolute difference test. The results of this research show that the growth of fixed assets has a significant positive effect on regional revenue, while the growth of fixed assets moderated by the inclusion of capital has an insignificant effect on the regional revenue.