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Technical efficiencies of Indonesian regional and non-regional banks pre- and post-financial crisis

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  • Nury Effendi
  • Maman Setiawan
  • Rina Indiastuti

Abstract

This research investigates technical efficiencies of Indonesian banks operating regionally and nationally pre- and post-financial crisis in 2008. The data envelopment analysis (DEA) with bootstrapping approach is applied to estimate the technical efficiency. This study uses 119 banks listed in the Indonesian Central Bank of Indonesia and Financial Service Authority (OJK) with period from 2005 to 2014. Following the role of the banks, the technical efficiency is estimated using an intermediation approach. The results show that the banks are technically inefficient, on average. Overall, the average technical efficiency of the regional banks is lower than the non-regional banks. Also, there are significant differences of the technical efficiencies of the regional, non-regional and all banks between pre and post-financial crisis. Further, the differences of the technical efficiencies between regional and non-regional banks are significant only in all periods and post-financial crisis. In addition, the regional banks operating in the Java islands have higher average technical efficiency compared to the regional banks operating outside the Java island, although the difference is only significant in the period before the financial crisis.

Suggested Citation

  • Nury Effendi & Maman Setiawan & Rina Indiastuti, 2018. "Technical efficiencies of Indonesian regional and non-regional banks pre- and post-financial crisis," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 16(3), pages 355-366.
  • Handle: RePEc:ids:ijecbr:v:16:y:2018:i:3:p:355-366
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