Regional Financial Accountability as Moderator of Intergovernmental Transfers’ Impact on Economic Growth and Income Inequality
DOI:
https://doi.org/10.31092/jia.v9i1.3401Abstract
Fiscal decentralization in the form of intergovernmental transfers is one of the key instruments in supporting inclusive and sustainable economic development. However, the government still faces two major challenges: promoting economic growth and reducing income inequality. This study aims to analyze the impact of intergovernmental transfers—including General Allocation Funds (DAU), Special Allocation Funds (DAK), and Revenue Sharing Funds (DBH)—on economic growth and income inequality in Indonesia, while considering the moderating role of regional financial accountability. The data used covers intergovernmental transfers across all regencies/cities in Indonesia from 2013 to 2023, with the audit opinions of the Audit Board of Indonesia (BPK) serving as the moderating variable. The results show that: (1) intergovernmental transfers have a positive and significant effect on economic growth; (2) intergovernmental transfers have a negative and significant effect on income inequality; (3) regional financial accountability does not moderate the relationship between intergovernmental transfers and economic growth; and (4) regional financial accountability weakens the negative effect of intergovernmental transfers on income inequality. These findings indicate that fiscal decentralization policies need to be optimized to support economic development, while transparency and regional financial accountability remain crucial factors in ensuring the effectiveness and efficiency of government spending.
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