THE IMPACT OF GOVERNMENT OVERSIGHT ON CORRUPTION IN PROCUREMENT ACTIVITIES OF LOCAL GOVERNMENTS IN INDONESIA

摘要

This study examines the impact of supervision on corruption in procurement activities of local governments in Indonesia. Procurement in this study is classified into two activities based on the type of expenditure: (1) capital expenditures and (2) operating expenditures. Thus, this study will also identify which types of expenditures are more involved in corruption. This study also examines the moderation effect of government oversight on the association between procurement and corruption. Using panel data analysis for all provinces in Indonesia from 2010 to 2013, we find that capital expenditures has a positive association with corruption cases, while operating expenditures have an impact on local government financial losses. This paper, however, does not qualify the impact of government oversight on the association between procurement and corruption.