Poverty, Institutions, and Village Funds: Case of Rural Areas in Brebes and Banyumas Regencies, Central Java Province, Indonesia

Abstract

This study investigates the influence of spatial connectivity using geographically weighted regression (GWR) on rural poverty and the allocation of village funds in Indonesia. It employs panel data and village census information from 2018 to 2020. Indicators of social institutions are represented by variables of village meetings (musyawarah desa) and mutual cooperation (gotong-royong), whereas political factors are represented by variables related to the village government and the Village Council (Badan Permusyawaratan Desa or BPD). The panel model encompasses 1,130 observations, whereas the GWR model analyzes 565 villages in 2020. From a spatial perspective, locational considerations affect the relationship between village funds and poverty in the Brebes and Banyumas Regencies, demonstrating a positive correlation. The findings of the panel model demonstrate robustness, with village government and village meetings exhibiting a direct effect on rural poverty, whereas BPD and mutual cooperation do not significantly impact poverty through village funds.