ABSTRAK

This study aims to analyze the influence of Pendapatan Asli Daerah (PAD) and personnel expenditure on regional financial independence in districts and cities of Banten Province during 2018– 2022. Financial independence is a critical measure of a region's fiscal autonomy, reflecting its capacity to reduce dependence on external funding. This research addresses the persistent disparities in PAD and financial independence across regions, exploring how these factors contribute to fiscal performance. A quantitative research approach was employed, utilizing secondary data from regional financial statements published by the Directorate General of Fiscal Balance (DJPK). The dataset includes 40 observations across eight regions over five years. Multiple linear regression analysis was applied to evaluate the individual and simultaneous effects of PAD and personnel expenditure on financial independence. Descriptive statistics and classical assumption tests (normality, multicollinearity, heteroscedasticity, and autocorrelation) were conducted to validate the model. The results reveal that PAD has a positive and significant effect on financial independence (t-value = 2.537, p = 0.016), indicating that higher PAD contributes to fiscal autonomy. Personnel expenditure,however, has a negative but statistically insignificant effect (t- value = -1.744, p = 0.090). The coefficient of determination (R²) indicates that 10.3% of the variance in financial independence is explained by PAD and personnel expenditure, suggesting other unexamined factors. Research implications/limitations— The study is limited to the context of Banten Province and does not account for external factors such as governance quality or economic conditions, which may influence financial independence. Future research should incorporate broader variables and cross-regional comparisons to enhance generalizability. Originality/value– his research contributes to the literature on regional fiscal autonomy by emphasizing the role of PAD in achieving financial independence. The findings offer practical recommendations for optimizing local revenue generation and improving fiscal performance, providing valuable insights for policymakers and local goverments.

Keywords: Pendapatan Asli Daerah, personnel expenditure, financial independence, fiscal autonomy, Banten Province