The impact of government transfers and expenditure assignments as part of fiscal decentralization on the level of corruption: Evidence from Indonesia

Abstract

— Since 1999 Indonesia has provided as much autonomy as possible. Regional autonomy is provided together with funding through fund transfers and also flexibility in the budget. Fund transfers from the central government are used by local governments to fund expenditures following the desired needs. But on the other hand, the provision of authority makes the amount of corruption in Indonesia increase. This study aims to examine the effect of central government fund transfers and expenditure assignments as part of fiscal decentralization on the level of corruption in Indonesia. This study is a quantitative study with analysis using the most unusual multiple linear regression with a fixed-effect model. The object of this research is all provinces in Indonesia by taking data from 4 years 2013-2016. The results of this study prove that government transfer and expenditure assignment which are the measurement of fiscal decentralization in this study have a positive and significant impact on the level of corruption in Indonesia