Financing Rural Futures: Governance and Contextual Challenges of Village Fund Management in Underdeveloped Regions

Abstract

Effective management of village funds is central to financing sustainable and equitable rural futures, particularly in underdeveloped and resource-diverse regions such as Papua, Indonesia. This study explores the governance factors that shape the sustainability of village fund management (VFM) by examining institutional, financial, and socio-cultural dimensions across 212 villages. Primary data from village heads and secondary data on village-owned enterprises (BUMDes) and 2024 village fund allocations were analyzed using exploratory factor analysis (EFA), partial least squares structural equation modeling (PLS-SEM), and multi-group analysis (MGA). Seven key governance constructs emerged, with ethical governance, implementation capacity, mandatory disclosure and reporting, community participation, and financial management capacity demonstrating significant positive effects on sustainable VFM outcomes. In contrast, perceived social and economic impacts were negatively associated with performance, and planning quality exerted an influence only under specific contextual conditions. These relationships proved highly context-dependent, varying by geography, natural resource availability, transport accessibility, and demographic composition. The findings underscore the need for adaptive and context-sensitive governance strategies to strengthen institutional resilience, enhance fiscal equity, and maximize the developmental impact of village funds in underdeveloped rural regions.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 3 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.