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Evolution in the efficiency of the Indonesian banking sector: a DEA approach


  • Fadzlan Sufian


The paper provides empirical evidence on the evolution of the Indonesian banking sector's efficiency during the post Asian financial crisis period of 1999-2008. The efficiency estimates of individual banks are evaluated by using the data envelopment analysis (DEA) approach. The estimates of technical efficiency (TE) were observed to be consistently higher under intermediation approach vis-a-vis revenue approach. The empirical findings suggest that under the intermediation approach, the Indonesian banking sector's inefficiency stems largely from pure technical rather than scale, while scale inefficiency seem to outweigh pure technical inefficiency under the revenue approach.

Suggested Citation

  • Fadzlan Sufian, 2010. "Evolution in the efficiency of the Indonesian banking sector: a DEA approach," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 2(4), pages 388-414.
  • Handle: RePEc:ids:injams:v:2:y:2010:i:4:p:388-414

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    References listed on IDEAS

    1. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    2. Halkos, George & Salamouris, Dimitrios, 2001. "Efficiency Measures of the Greek Banking Sector: A Non-Parametric Approach for the Period 1997-1999," MPRA Paper 2858, University Library of Munich, Germany.
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    Cited by:

    1. Yang, Xiaopeng & Morita, Hiroshi, 2013. "Efficiency improvement from multiple perspectives: An application to Japanese banking industry," Omega, Elsevier, vol. 41(3), pages 501-509.
    2. repec:kap:ecopln:v:51:y:2018:i:1:d:10.1007_s10644-016-9200-3 is not listed on IDEAS
    3. Xiaopeng Yang & Hiroshi Morita, 2012. "A DEA model with identical weight assignment based on multiple perspectives," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 4(1), pages 18-35.


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