The Effect of Financial Performance on Human Development Index of Districts and Cities Governments in North Maluku Province

Abstract

The research aims to analyze the effect the financial performance on Human Development Index (HDI) of local government in North Maluku Province. The financial performance used are decentralization, independence, and effectiveness ratios. This study uses quantitative research with research subjects of districts and cities in North Maluku Province. This study involves 10 regencies/cities as the population of North Maluku Province during 2015 - 2019. The research population used was 50 samples for five years duration. The research analysis is multiple regression models.The results show that decentralization, independence and effectiveness ratio have significant and positive effect on human development index. Higher decentralization, independence and effectiveness will increase the Human Development Index. Fiscal decentralization as mandated in law has been implemented by district and city governments in North Maluku Province. The decentralization and independence ratios show a positive relationship with community based on by Human Development Index. The effectiveness ratio supports the other two ratios in efforts of District and City governments to increase the Local income as an important factor for decentralization and local independence.

Keywords: Financial Performance, Human Development Index

DOI: 10.7176/RJFA/12-18-09

Publication date:September 30^th 2021