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The Determinants Of Bank’S Efficiency In Indonesia

Author

Listed:
  • Astoeti Wahjoe Widiarti

    (OJK)

  • Hermanto Siregar

    (School of Business Bogor Agricultural University)

  • Trias Andati

    (School of Business Bogor Agricultural University)

Abstract

This paper measures the efficiency of the banks using the intermediation approach and the Data Envelopment Analysis (DEA) on quarterly data of 108 conventional banks in Indonesia during the period of 2012Q1 to 2014Q4. The results shows that the Indonesian banking industry is inefficient in its intermediation function, which is in line with their financial indicators namely the total increasing asset, stable ROA of around 2-3%, and their Operating to Income Cost ratio of about 66-83%. Furthermore, we apply data panel estimation to estimate the determinant of this efficiency; the result shows the bank’s type, the Non Performing Loan (NPL), the Loan to Deposit Ratio (LDR), the size of the bank, the Cost Efficiency Ratio (CER), and the Capital Adequacy Ratio (CAR); significantly affect the bank’s efficiency in Indonesia.

Suggested Citation

  • Astoeti Wahjoe Widiarti & Hermanto Siregar & Trias Andati, 2015. "The Determinants Of Bank’S Efficiency In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 18(2), pages 1-28, July.
    • Handle: RePEc:idn:journl:v:18:y:2015:i:2a:p:1-28
    DOI: https://doi.org/10.21098/bemp.v18i2.520
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    Citations

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    Cited by:

    1. Sajida Sari & Shochrul Rohmatul Ajija & Wasiaturrahma Wasiaturrahma & Raja Adzrin Raja Ahmad, 2022. "The Efficiency of Indonesian Commercial Banks: Does the Banking Industry Competition Matter?," Sustainability, MDPI, vol. 14(17), pages 1-16, September.
    2. Phan, Dinh Hoang Bach & Narayan, Paresh Kumar & Rahman, R. Eki & Hutabarat, Akhis R., 2020. "Do financial technology firms influence bank performance?," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).

    More about this item

    Keywords

    Banking; efficiency; panel estimation; Indonesia;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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