The Influence of Regional Original Revenue and Central Government Transfers on the Financial Independence of Regencies/Municipalities in North Sumatra Province

Abstract

This study aims to analyze the effect of Local Own-Source Revenue (PAD) and central government transfers on regional financial independence in regencies/cities in North Sumatra Province. This study employed a causal associative research design using secondary data. The population consisted of all regencies/cities in North Sumatra Province, with a sample of 28 regencies/cities selected using purposive sampling. Data were analyzed using multiple linear regression, including classical assumption tests, the simultaneous F-test, the partial t-test, and the coefficient of determination. The results indicate that Local Own-Source Revenue and central government transfers simultaneously have a significant effect on regional financial independence. Partially, both Local Own-Source Revenue and central government transfers also have a significant effect on regional financial independence.