PENGARUH DANA PERIMBANGAN DAN EFISIENSI PENGELOLAAN KEUANGAN DAERAH TERHADAP PERTUMBUHAN EKONOMI PROVINSI JAWA TIMUR YANG DIMEDIASI BELANJA MODAL

Economic growth is often used as an indicator of aggregate economic progress (Nuraini, 2017). In 2023, economic growth in East Java Province experienced a decline. In contrast, in 2022, economic growth had rebounded above 5% after previously being affected by the COVID-19 pandemic. Prior to the pandemic, East Java's economic growth consistently remained above 5%. According to data from Statistics Indonesia (BPS), 19 out of 38 cities/regencies showed a slowdown in economic growth in 2023, with Bangkalan Regency recording the lowest growth.This study employs a quantitative research approach using path analysis. The findings indicate that intergovernmental fiscal transfers (dana perimbangan) do not have a significant effect on economic growth. However, the efficiency of regional financial management does have a significant influence on economic growth. Furthermore, capital expenditure fully mediates the relationship between intergovernmental fiscal transfers and economic growth. In contrast, capital expenditure does not mediate the relationship between regional financial management efficiency and economic growth.