Abstract:

This study aims to explore the influencing factors of village fund effectiveness to accelerate local economic development. It examined 24 adopted-public finance determinants of village fund governance to determine the influencing variables. The research analyzed 400 respondents located at four districts in North Sumatera province (i.e., Langkat, Deli Serdang, Asahan, and Mandailing Natal districts), which were the most active regions in absorbing the fund. It employed a factor analysis using the SPSS statistical program. It found four extracted-factors, indicating the antecedents of reliable local public finance administration to govern village fund: management, planning, rural people participation, and local development resources. The results revealed that village fund management was the most influencing factor, implying the core challenge of local public finance governance. The villagers perceived that village administrators were not capable enough to review the village’s needs and yet equipped with the necessary skills to manage the village funds.