The Role of Local Government Financial Performance in Achieving Sustainable Development Goal 11

Maya Sari; Mohammad Iqbal Bakry; Latifah Sukmawati Yuniar; Andi Chairil Furqan

Authors

Maya Sari Faculty of Economics and Business, Universitas Tadulako, Indonesia
Mohammad Iqbal Bakry Faculty of Economic and Business, Univesitas Tadulako, Indonesia
Latifah Sukmawati Yuniar Faculty of Engineering, Universitas Tadulako, Indonesia
Andi Chairil Furqan Faculty of Engineering, Universitas Tadulako, Indonesia

Keywords:

Sustainable Development Goal 11, Solvency, Financial Flexibility

Abstract

This study examines the role of local government financial performance in achieving Sustainable Development Goal (SDG) 11, with a particular focus on Target 11.1 concerning access to adequate and affordable housing. The study is motivated by Indonesia’s persistent housing backlog and the extensive presence of slum settlements, alongside uneven fiscal capacity and suboptimal allocation of local budgets for the housing sector. The analysis employs panel data covering 542 local governments in Indonesia from 2019 to 2022, resulting in 2,144 observations, and applies a random effects panel regression model. The findings indicate that total solvency has a positive and significant effect on SDG 11 achievement, suggesting that stronger long-term fiscal capacity enhances sustainable urban development outcomes. In contrast, financial flexibility shows a significant negative effect, implying that excessive flexibility without clear development priorities may hinder SDG performance. Institutional age, population size, and archipelagic status as control variables also exhibit positive effects. Overall, the study underscores the importance of strengthening local fiscal governance to support sustainable housing development.

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