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The Branch Expansion And The Performance Of The Banks: The Case Of Indonesia

Author

Listed:
  • Hery Prasetyo

    (Institut Teknologi Sepuluh Nopember)

  • Sony Sunaryo

    (Institut Teknologi Sepuluh Nopember)

Abstract

Opening new branches may help the banks to expand and is a priority for the banks to enlarge the public inclusion. Indonesian banking industry is currently not efficient and still focus more on networking the branches than improving the banking access to the public. This paper utilize the path analysis to see the link betweeen the branch expansion and the performance of the banks. The analysis shows that the increase of the number of branches and employees does not significantly influence the financial performance of the banking industry from the period of 2011-2012. This prove that the inefficiency of banking industry as one of the performance indicators of banking is not the main factor that be caused by increasing the number of branches and employees.

Suggested Citation

  • Hery Prasetyo & Sony Sunaryo, 2015. "The Branch Expansion And The Performance Of The Banks: The Case Of Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 18(1), pages 1-22, July.
    • Handle: RePEc:idn:journl:v:18:y:2015:i:1d:p:1-22
    DOI: https://doi.org/10.21098/bemp.v18i1.518
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    Cited by:

    1. Bayront Yudit Rumondor & Pakasa Bary, 2020. "Capital Flows and Bank Risk-Taking Behavior: Evidence From Indonesia," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(special i), pages 33-53.

    More about this item

    Keywords

    Number of branches and employees; Financial performance of industrial banking; Path Analysis;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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