INVESTIGATING THE EFFECT OF REVENUE DIVERSIFICATION ON FINANCIAL SUSTAINABILITY IN PUBLIC UNIVERSITY (PTN BH) IN INDONESIA

• Main Author: Muhammad Irfansyah, Ammar
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/85609
• Institution: Institut Teknologi Bandung

This study critically examines the impact of revenue diversification on the financial sustainability of Public Universities with Legal Entity Status (PTN-BH) in Indonesia, a context marked by diminishing government funding and an increasing emphasis on financial autonomy. The research analyzes the relationship between revenue diversification and financial sustainability, employing Return on Assets (ROA) and Net Profit Margin (NPM) as key indicators. Utilizing panel data from 10 PTN-BH universities over a five-year period (2018-2022), the study applies pooled Ordinary Least Squares (OLS) regression models to explore this relationship. The findings reveal a counterintuitive negative correlation between revenue diversification and financial sustainability, suggesting that higher diversification may undermine rather than bolster financial performance. This outcome challenges the conventional assumption that diversification inherently enhances financial stability, indicating that a more concentrated revenue strategy may be more effective in this specific context. Additionally, the study identifies significant roles for factors such as institutional age, duration of PTNBH status, and geographical location in influencing financial outcomes, underscoring the need for a nuanced understanding of revenue management in higher education. The study contributes to the broader discourse on financial management in higher education by highlighting the potential pitfalls of revenue diversification. It calls for a reexamination of diversification strategies, emphasizing the importance of context-specific approaches that consider the unique operational and financial dynamics of each institution. The findings suggest that future research should delve deeper into the underlying mechanisms of these relationships and explore strategic financial practices that can enhance the long-term sustainability of higher education institutions.