Abstract
The banking sector is one of the most regulated industries and the impact of regulation and supervision on banks' performance are mixed, some positive and others negative. Hence, empirical studies become all the more important to assist banking authorities in their regulatory and supervisory roles to produce informed policy decisions. We examine the impact of bank regulation and supervision on bank scale efficiency over the period 2002-2011. Scale efficiency allows banks to operate at optimum scale, allowing banks to optimise performance. The overall results of our study showed that there is significant impact of bank regulation and supervision on scale efficiency. As far as we know, this study is unprecedented in the Indonesian context.
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