This research is aimed to examine the effect of local financial performance to the social welfare on districts and municipals of South Sulawesi on 2008-2012. Local financial performance as independent variable is represented by Human Development Index (HDI). Based on the aim, this research use Panel Regression with Random Effect Model (REM) as analytical tool.

This empirical results show that local financial performance simultanously has a positive significant effect on social welfare. The local autonomy rate partially has a positive significant effect on social welfare. Meanwhile, effectiveness on local financial performance has a positive effect but not significant on social welfare, and efficiency of local financial performance partially has a negative effect but not significant on social welfare.