Financial Performance Analysisof Regional Governments and Its Influence on Community Welfare (Empirical Study on Cities and Regencies in Jambi Province,Fiscal Year 2015-2020)

ABSTRACT : This study aims to analyze financial performance, regional financial capacity and to find outempirically the effect of the Regional Financial Independence Ratio, Fiscal Decentralization Ratio,Effectiveness Ratio, and Regional Financial Efficiency Ratio on the Welfare of the City and District Communityof Jambi Province for the 2015-2020 Fiscal Year. The analytical tools used in this study are financial ratiosmeasuring tools, Regional Original Revenue performance analysis tools through share and growth measureswhich are then described in a financial capability map using the quadrant method and index method, and usingpanel regression to determine the effect of regional financial performance on welfare community, as measuredby the Human Development Index (HDI). The result of this research is that the level of independence of citiesand regencies throughout Jambi Province still depends on transfer funds from the Central Government. Theaverage regional independence ratio is 9.40%. The Fiscal Decentralization Ratio is not maximal with an averageFiscal Decentralization Ratio of 8.33%. The effectiveness ratio has shown a positive trend with an average ratioof 103.41%. Efficiency Ratio shows the expenditure for spending less efficient. Average Efficiency Ratio99.62%. From the results of the analysis of regional financial capabilities, the average share and growth is < 1which is included in the low category. Then by mapping the regional financial capacity based on the quadrantmethod, the cities and regencies of Jambi Province are in quadrant IV position. Regional financial performancesimultaneously has a positive and significant effect on people’s welfare. Regional financial independence has apositive and not significant effect. Fiscal Decentralization has a negative and insignificant effect. RegionalFinancial Effectiveness has a positive and insignificant effect. Regional Financial Efficiency has a positive andinsignificant effect.

KEYWORDS -Financial Performance, Community Welfare