lxxv P-Value
0.6528 0.0006
0.1271 0.0120
0.1034
The first discussion relat es t o profit abilit y rat ios. The rat ios are r et urn on equit y ROE, ret urn on asset s ROA and profit mar gin PM . The result show s t hat only size represent ed by
populat ion Log Pop w hich influences profit abilit y rat ios t hat repr esent ed by r et urn on equit y rat io ROE and profit margin rat io PM .
The next Hypot hesis t est involves shor t -t er m solvency rat io w hich is repr esent ed by curr ent rat io CR. Table 10 show s t hat CR is influenced by macroeconomic fact ors represent ed by GRDP.
Capit al st r uct ure r at ios consist of D E and L A. Table 11show s t hat all exogenous variables have no influence on D E. Table 11 also show s t hat all exogenous variables have no influence on
L A. Thus, none of exogenous variables have inf luence on capit al st ruct ure rat ios. The final analysis involves local governm ent original revenue rat ios. Geographical fact ors
repr esent ed by island-based locat ion of local gover nment s IBLOG have influence on asset s t urnover rat io AT and local governm ent original revenue t o t ot al revenue LORTOR. On t he
ot her hand, geographical fact ors r epr esent ed by administ rat ive st at us of local government s ASLOG has t he influence on local governm ent origi nal revenue t o t ot al revenue LORTOR and
local governm ent original revenue t o operat ing expense LORPREX. The macroeconomic-fact or cont ribut ion t o local government original rat ios is represent ed by GRDP w hich influences local
governm ent original revenue t o t ot al r evenue LORTOR and local government original revenue t o operat ing expense LORPREX.
c. Tw o year analysis
Tw o year analysis employs differ ent m et hods from previous analyses w hich use cross- sect ional dat a. Tw o year analysis employs t he combinat ion of cross-sect ional dat a and t im e-series
lxxvi dat a. This m eans t hat m odel invest igat ion expands t he model analysis by involving t he t ime
changes. This t ype of dat a is panel dat a Gujarat i, 2004. The analysis used f or panel dat a is called panel analysis Adkins, 2007. The follow ing panel dat a analysis comprises t w o aspect s;
assumpt ion and hypot hesis t est . a.
Panel analysis assumpt ion Panel analysis assumpt ion comprises Br eusch-Pagan t est t o t est variance error and
Hausman t est t o t est t he consist ency of generalized least squar e GLS Adkins, 2007. The r esult of panel analysis is present ed in follow ing t able.
Table 12 Panel Analysis Assumption
Dependent Variables
Breusch-Pagan Hausman
p-value p-value
ROE 0.7990
0.3105 ROA
0.4216 0.7439
PM 0.2411
0.2540 CR
0.8341 0.8787
D E 0.6193
0.9702 DETA
0.2667 0.9238
AT 0.9346
0.1941 LORTOR
0.9795 0.4775
lxxvii LORPREX
0.8553 0.5577
Table 12 show s t hat all assumpt ion for all models do not suff er violat ions since t he p-values for all models do not exceed 0.05.
b. Hypot hesis t est
Hypot hesis t est result for t w o year analysis is represent ed in following t able.
Table 13 Hypothesis Test Result for Tw o-Year Analysis
Dependent Variables
Independent Variables
Log GRDP Log Infl
Log Pop ASLOG
IBLOG ROE
Coeffici ent 0.0122
-0.0452 -0.0137
-0.0189 0.0053
P-Value 0.08884
0.0003 0.0015
0.0189 0.5501
ROA Coeffici ent
0.0049 0.0146
-0.0235 -0.0297
0.0041
lxxviii P-Value
0.7748 0.6257
0.0231 0.1221
0.8463 PM
Coeffici ent 0.6509
-2.2947 -0.7102
-1.0830 -0.0863
P-Value 0.0031
0.0000 0.0000
0.0000 0.74545
CR Coeffici ent
91.4042 -133.931
-46.9792 -109.268
-2.1221 P-Value
0.0837 0.0944
0.0886 0.0332
0.9698 D E
Coeffici ent -0.0016
-0.0061 0.0054
0.0109 -0.0048
P-Value 0.6961
0.4015 0.0318
0.0188 0.3433
D A Coeffici ent
-0.0024 -0.0114
0.0060 0.0105
-0.0077 P-Value
0.5748 0.1272
0.0197 0.0281
0.1407 AT
Coeffici ent 0.0020
-0.0090 -0.0007
0.0044 0.0142
P-Value 0.5122
0.0965 0.6909
0.2049 0.0002
LORTOR Coeffici ent
0.0266 -0.0358
-0.0194 0.0092
0.0496 P-Value
0.5090 0.6100
0.4216 0.8379
0.3129 LORPREX
Coeffici ent 0.0284
-0.0073 -0.0039
0.0311 0.0451
P-Value 0.0246
0.7362 0.6017
0.0279 0.0041
Profit abilit y rat ios repr esent ed by ROE is influenced by macr oeconomic fact or s r epr esent ed by GRDP and inflat ion, size represent ed by populat ion and geographical fact ors represent ed by
ASLOG. On t he ot her hand, profit abilit y rat ios represent ed by ROA is influenced by size repr esent ed by populat ion. The last profit abilit y rat ios is represent ed by PM w hich influenced by
all exogenous variables except geographical fact ors represent ed by IBLOG. The next hypot hesis t est involves shor t -t erm solvency using curr ent rat io CR. Table 13
show s t hat curr ent rat io is influenced by macroeconomic fact ors r epresent ed by GRDP and inflat ion, size represent ed by populat ion and geographical fact ors represent ed by ASLOG.
lxxix Capit al-st ruct ur e rat ios consist of debt t o equit y rat io and debt t o t ot al asset s. The result
show s t hat D E and L A ar e inf luenced by size r epr esent ed by populat ion and geographical fact or s repr esent ed by ASLOG. In ot her w ords, capit al st ruct ure rat ios ar e inf luenced by size r epr esent ed
by populat ion and geographical fact ors repr esent ed by ASLOG. The last rat ios are performance r at ios t hat consist of asset t urnover rat io AT, local
governm ent original revenue t o t ot al revenue rat io LORTOR and local government original revenue t o operat ing expenses rat io LORPREX. The Hypot hesis t est result show s t hat AT is
influenced by size repr esent ed by populat ion and geographical f act ors repr esent ed by ASLOG. On t he ot her hand, none of exogenous variables have influences on LORTOR. The last performance
rat io is LORPREX. Table 13 show s t hat LORPREX is influenced by macroeconomic fact ors repr esent ed by GRDP, geographical fact ors repr esent ed by ASLOG and IBLOG.
C. Discussion
