This study aims to determine the impact of the financial performance of capital expenditure and economic growth in the local government district/city D.I. Yogyakarta in 2003-2014. This research is a descriptive research. The population of this research is the local government in the district and city D.I. Yogyakarta in 2003-2014. Sampling technique using census method, which uses the entire population in the study. Analysis technique is using multiple regression analysis. The results of this study indicate that financial ratios based on local independence, financial dependence, and the effectiveness of the PAD does not affect the allocation of capital expenditures. Capital expenditure has significantly positive effect on economic growth. Capital expenditure is not mediate the relationship between financial performance based on financial dependence and independence of the region to economic growth. While capital expenditure mediates the relationship between the effectiveness of PAD by economic growth with a negative direction.