Previous Research LITERATURE REVIEW

34 1. The DAU has a positive and significant effect on direct expenditures. 2. The PAD has partially positive and significant effects on direct expenditures. 3. The DAU and the PAD have simultaneously significant effects on direct expenditures. Table 2.2 Previous Research Table No. Author Year Thesis Title Variables Conclusions 1 Syukriy Abdullah Abdul Halim 2004 Effect of General Allocation Funds DAU and Original Local Government Revenues PAD On Local government expenditure Budget. Case Study Districts Cities on Java and Bali island 1. General Allocation Funds DAU 2. Original Local Government Revenues PAD 3. Local government expenditure Budget Original Local Government Revenues PAD and General Allocation Funds DAU have significant influence on the local government expenditure budgets. 2 Mutiara Maimunah 2006 Flypaper Effect on General Allocation Funds DAU and Original Local Government Revenues PAD to local government expenditure budget case study Sumatra island 1. General Allocation Funds DAU 2. Original Local Government Revenues PAD 3. Local government expenditure Budget Flypaper Effect can used for predicting Local Government Expenditures in the future.There are no differences in the occurrence of Flypaper Effect on PAD. 3 Nur Indah Rahmawati 2010 The Effect of General Allocation Funds DAU and Original Local Government Revenues PAD On Local government expenditure Budget 1. General Allocation Funds DAU 2. Original Local Government Revenues PAD 3. Local government expenditure Budget Original Local Government Revenues PAD and General Allocation Fund DAU have significant influence on local government expenditure budgets 35 Table 2.2 Previous Research Table Continued 4 Puspita Sari 2009 Effect of General Allocation Funds DAU and Original Local Government Revenues PAD On Local government expenditure Budget 1. General Allocation Funds DAU 2. Original Local Government Revenues PAD 3. Local government expenditure Budget 1. The DAU has a positive and significant effect on direct expenditures. 2. PAD has partially a positive and significant effect on direct expenditures. 3. DAU and PAD simultaneously have a significant effect on direct expenditures

C. Theoritical Framework

The Original Local Government Revenues PAD is local revenues consisting of the local taxes, Retribution, earnings from Regional Owned Enterprises BUMD and other legitimate incomes. In this research try to analyze the effect of The Original Local Government Revenues PAD to local government expenditure BD in lampung province, whether the same to the results of previous studies which can conclude that the larger PAD increases the local government expenditure activities. The General Allocation Funds DAU is the funding coming from the state budget APBN allocated for the purpose of inter-regional fiscal capacity equalization to finance the Expenditures in the context of decentralization. In this research try to analyze the effect of The General Allocation Funds DAU to local government expenditure BD in lampung 36 province whether the same to previous research which stated that DAU implicates the magnitude of local government expenditures. in this research also combine two independent variable The Original Local Government Revenues PAD and The General Allocation Funds DAU and analyze simultaneously effect to the local government expenditure BD whether the effect the both independent variable to local government expenditure same at the other districtscities at the previous research. Figure 2.1 Theoretical Framework Financial Report 2008, 2009, 2010 The Original Local Government Revenues PAD X1 The General Allocation Funds DAU X2 Local government expenditure Budget BD Y1 Dependent Variable H1: X1 Influence to Y H2: X2 influence to Y H3: X1 X2 influence to Y Regression Analysis Conclusion and recommendation Independent Variable 37

D. Research Hypothesis

Based on the theoretical framework above, can be formulated these alternative hypotheses. Ha1 : Original Local Government Revenues PAD no significantly effecting Local Government Expenditures. Ha2 : General Allocation Funds DAU significantly effecting Local Government Expenditures Ha3 : Original Local Government Revenues PAD, the General Allocation Funds DAU, and simultaneously implies significant impact on Local Government Expenditures.