The role of coalition parties and local government expenditure: Evidence from the developing country

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Abstract

This study aims at examining the role of coalition parties on local government expenditure. The coalition parties are comprised of several parties that support the regional head in the local government. Specifically, this study focuses on two important aspects of local government expenditure: education and health expenditure. The research question of the study is “Does the coalition parties have a significant effect on the local government expenditure?”. The independent variable of the study is coalition parties that support elected regional heads. The dependent variable is local government expenditure, which consists of education and health expenditures. The sample of the study was the local government in the Republic of Indonesia from the 2016–2018 period. There are 632 observations as the sample of the study. The results revealed that coalition parties have a negative effect on education and health expenditure. The higher percentage of coalition parties has decreased the local government expenditure on both education and health expenditures. The result of the study shows that coalition parties have a significant effect on the local government expenditure. This study confirms Lewis and Hendrawan’s (2019) argument that coalition parties have used their discretion to influence the regional heads’ decisions on the local government expenditure.

Keywords: Coalition Parties, Local Government Expenditure, Education Expenditure, Health Expenditure, Regional Heads

Authors’ individual contribution: Conceptualisation — H.P.R., D.S., and J.W.; Methodology — H.P.R. and D.S.; Formal Analysis — H.P.R., D.S., and J.W.; Writing — Original Draft — H.P.R., D.S., and J.W.; Writing — Review & Editing — D.S. and J.W.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: The Authors acknowledge financial support from the Directorate General of Higher Education, Ministry of Education, Culture, Research and Technology, the Republic of Indonesia, under Grant No. 221.1/UN27.22/HK.07.00/2021.

JEL Classification: H5, H8, I0

Received: 09.09.2021
Accepted: 09.11.2021
Published online: 11.11.2021

How to cite this paper: Rizky, H. P., Setiawan, D., & Winarna, J. (2021). The role of coalition parties and local government expenditure: Evidence from the developing country. Corporate Governance and Organizational Behavior Review, 5(2), 82–89. https://doi.org/10.22495/cgobrv5i2p8