Adler Manurung
Universitas Bhayangkara Jakarta Raya, Indonesia

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Financial Health as a Mediator Between Local Government Performance Determinants and Accountability: Evidence from West Java Rachmat Pramukty; Nera Marinda Machdar; Adler Manurung; Sugeng Suroso
Smart Society Vol. 6 No. 3 (2026): Smart Society
Publisher : FOUNDAE (Foundation of Advanced Education)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.58524/smartsoc.v6i3.1377

Abstract

Local governments are required to demonstrate performance accountability through the Government Agency Performance Accountability Report (Laporan Akuntabilitas Kinerja Instansi Pemerintah, LAKIP); however, substantial variations in accountability performance remain across regions, while the role of financial health in linking institutional, strategic, and fiscal factors with accountability performance remains insufficiently examined. This study examines the relationships between Regional Head Commitment, Key Performance Indicators (Indikator Kinerja Utama, IKU), Regional Own-Source Revenue (Pendapatan Asli Daerah, PAD), Strategic Performance Targets, and LAKIP scores, with the Integrated Financial Health Index (IKKT) examined as a mediating variable. A quantitative explanatory design was employed using panel data from all 27 regency and municipal governments in West Java, Indonesia, covering the 2019–2023 period and yielding 135 local government-year observations. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 3.0. The results show that Regional Head Commitment (β = −0.080, p = 0.015), PAD (β = 0.793, p < 0.001), and Strategic Performance Targets (β = −0.061, p = 0.046) are significantly associated with LAKIP scores, whereas IKU is not statistically significant (β = 0.085, p = 0.063). The negative coefficients for Regional Head Commitment and Strategic Performance Targets reflect the reverse coding applied to these measures. IKKT is significantly associated with Regional Head Commitment (β = −0.079, p = 0.014), PAD (β = 0.681, p < 0.001), and Strategic Performance Targets (β = 0.150, p = 0.035), while its relationship with IKU is not significant. IKKT is also positively associated with LAKIP scores (β = 0.321, p < 0.001). Mediation analysis indicates that IKKT partially mediates the relationship between PAD and LAKIP, as the indirect effect is significant (β = 0.218, p = 0.002) while the direct relationship remains significant. These findings imply that strengthening local government accountability requires attention not only to performance planning and leadership commitment but also to fiscal capacity and financial health. This study contributes empirical evidence by demonstrating the intermediary role of financial health in the relationship between regional fiscal capacity and local government performance accountability within the Indonesian context.