Document Type
Article
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.
Recommended Citation
Widiarti, Astoeti Wahjoe; Siregar, Hermanto; and Andati, Trias
(2015)
"THE DETERMINANTS OF BANK'S EFFICIENCY IN INDONESIA,"
Bulletin of Monetary Economics and Banking: Vol. 18:
No.
2, Article 4.
DOI: https://doi.org/10.21098/bemp.v18i2.520
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol18/iss2/4
First Page
129
Last Page
156
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
Indonesia
Affiliation
Bogor Agricultural University
