Quest Journals Journal of Research in Business and Management Volume 9 ~ Issue 8 (2021) pp: 12-22 ISSN(Online):2347-3002 www.questjournals.org *Corresponding Author: Ribka Pabutungan 12 | Page Research Paper Regional Financial Capabilities And Economic Growth In North Toraja District Ribka Pabutungan 1 , Sanusi Fattah 2 , Jumidah Maming 3 1) North Toraja District Government 2) Department of Economics, Faculty of Economics and Businss, Hasanuddin University 3) Department of Management, Faculty of Economics and Businss, Hasanuddin University Abstract: This research aims to determine the effect of independence, regional financial dependence, income effectiveness, and the degree of fiscal decentralization on economic growth in North Toraja District. In this research, the method used by the researcher is a quantitative descriptive method. The results showed that independence had a significant effect on economic growth in North Toraja District, meanwhile regional financial dependence, income effectiveness, and fiscal decentralization had no effect on economic growth in North Toraja District. However, independence, regional financial dependence, revenue effectiveness, and fiscal decentralization together have a positive and significant impact on the economic growth of North Toraja District. Keywords: Regional Finance Independence, Regional Finance Dependence, Income Effectiveness, Economic Growth Received 28 July, 2021; Revised: 10 August, 2021; Accepted 12 August, 2021 © The author(s) 2021. Published with open access at www.questjournals.org I. INTRODUCTION Economic growth is one of the benchmarks that can be used to increase the development of an area from various economic sectors which indirectly describes the level of economic change. Economic growth means the development of activities in the economy which causes the goods and services produced to increase and the prosperity of the community to increase. One of the factors in determining the success of economic development is by looking at its economic growth. In formulating regional development, high economic growth is the main target. Restiatun in Pratama and Soejoto (2013) states that economic growth marked by an increase in Gross Regional Domestic Product (GRDP) is needed to accelerate a balanced and dynamic economic structure characterized by a strong and advanced industry, and has a balanced sectoral growth base. Thus, economic growth becomes an illustration of performance in carrying out development. The statement also concludes that an increase in GRDP will result in an increase in economic growth. As an autonomous region, North Toraja District continues to improve itself to increase revenue sources to create regional independence. Even though the fiscal conditions in North Toraja District from the four components of revenue sources, that are regional taxes, regional levies, the results of separated regional wealth management and other legitimate Regional Original Income (PAD) have not played an optimal role. The consequence of the implementation of regional autonomy in North Toraja District lies in the ability of regional finances to finance the administration of its government, so that it can have an impact on the regional economy. Regional financial capacity is measured by several indicators, including the ratio of independence, financial ability, income effectiveness, and the degree of decentralization (Sumardjoko, 2019). However, the problem is that there is no empirical evidence that shows the influence of regional financial capacity on economic growth in North Toraja District, making it important to be researched. II. THEORETICAL AND LITERATURE REVIEW 2.1. Regional Development Planning Theory Hirscman's opinion in Adisasmita (2013) states that each region has different potential growth factors which include natural resources, labor, capital and technology. These differences in economic growth factors encourage regional specialization based on the comparative advantages of each region. Each region will concentrate on producing goods and services by intensively utilizing relatively excess production factors or