Efficiency Of Banks In Indonesia Research Articles

Bank Efficiency in Indonesia in the Perspective of an Intermediation Approach

Bank Efficiency in Indonesia in the Perspective of an Intermediation Approach

The Efficiency of Indonesia and Malaysia Sharia Bank in the Shadow of Covid-19 Pandemic: DEA Window Analysis

The Pandemic conditions can lead to various problems that can trigger financial distress and inefficiency, especially in the banking sector. In recent decades, there has been a rapid increase in sharia banking, and the importance of this sector to the economies of several countries. The assessment of sharia bank's efficiency will become important as efficiency reflects the banks' performance. This study aims to analyze the stability of sharia bank efficiency in Indonesia and Malaysia using the Data Envelopment Analysis (DEA) dan DEA Window method. This study uses 2015 to 2020 as a research period, especially to look at the stability efficiency of Indonesia and Malaysian Sharia Bank in the Covid-19 pandemic era. The result showed that Indonesia is better than Malaysia in terms of efficiency stability. However, both show a similar pattern, where there is a decrease in the average level of efficiency during the Covid-19 pandemic. From the perspective of efficiency stability analysis through several summary statistics such as its Standard Deviation (SD), Long Distance per Period (LDP), and Long Distance per Year (LDY), the sharia bank with the most relatively stable value of efficiency scores is Maybank Islamic Berhad, then followed by BRI Syariah and BSM.

EFISIENSI PERBANKAN DI INDONESIA DENGAN METODE DATA ENVELOPMENT ANALYSIS (DEA) SEBAGAI PERTIMBANGAN KINERJA PERBANKAN

<p align="justify">To implement sound banking principles, the assessment of bank efficiency is very important. This is because efficiency is a picture of a bank's performance as well as a factor that must be considered by the bank to act rationally in minimizing the level of risk faced in dealing with its operational activities. This study aims to measure the relative efficiency of banks in Indonesia using the Data Envelopment Analysis (DEA) methodology based on the intermediation approach. The research samples are Mandiri, BRI, BNI, BCA, and BTN. DEA is a methodology with a non-parametric-deterministic approach that aims to determine the relative efficiency and managerial performance, based on empirical data by determining the input and output of a UPK (Decision Making Unit). The results showed that BNI was relatively inefficient during the study years. Bank Mandiri was efficient in 2013. BCA was relatively inefficient during the study years. BRI experienced perfect efficiency level in 2013. BTN experienced perfect efficiency level from year to year. Overall, the commercial banks that are widely referenced by other commercial banks are BRI in 2011, BTN, BNI, and Bank Mandiri in 2013. The summary of potential improvement shows that the combined sources of inefficiency in banks are revenue needs to be increased by 35.58% and credit needs to be increased by 31.83%. While deposits need to be reduced by 9.49%, total assets need to be reduced by 1.51%, and interest expenses reduced by 21.48%.</p><p><strong>Key words:</strong> Banking, Efficiency, DEA Methodology Approach.</p>

Fintech Innovation and Bank Efficiency in Indonesia

This study intends to determine the impact of fintech adoption on the efficiency of conventional banks in Indonesia between 2013 and 2019. The population of this study consisted of all conventional banks listed on the Indonesia Stock Exchange (IDX) between 2013 and 2019, whilst the sample consisted of 38 conventional banks selected using the purposive sampling technique. This study employs two analyses: Data Envelopment Analysis (DEA) to measure bank efficiency and panel data regression analysis to test the hypothesis of the effect of fintech adoption on commercial banks in Indonesia in 2013-2019 using the Stata program. According to the findings of this research, fintech appears to have a positive and discernibly noticeable impact on the operational efficiency of banks. The greater the number of fintech facilities offered by banks, the greater their efficiency; therefore, banks must strengthen innovation and bank infrastructure in order to implement fintech.

Analysis of the effect of bank size, credit risk, and capital adequacy on cost efficiency of banks in Indonesia (SFA method)

Many banks are competing to achieve bank cost efficiency for business continuity amidst the competition in the banking sector. So banks need to review cost-efficiency regularly. The purpose of this study was to analyze determinants of bank cost efficiency. Variable use bank size, capital adequacy, return on asset, group of the bank, credit risk, economic growth, and inflation on bank cost efficiency in Indonesia. Determination of bank input and output variables using a bank intermediation approach. This study used panel data on 38 banks in Indonesia for the period 2012-2018. This paper used the Stochastic Frontier Analysis (SFA) analysis method. The results of this study reveal four things. First, bank size has a negative effect bank cost efficiency. Second, credit risk has a positive effect on bank cost efficiency. Third, capital adequacy has a positive effect on bank efficiency. Fourth, the small core capital bank group has a negative effect on bank cost efficiency. Bank external variables do not affect bank cost efficiency in Indonesia.

Dinamika Pemilihan Variabel Input-Output Pada Penelitian Efisiensi Perbankan Syariah di Indonesia

Islamic banking is the backbone of a justice economy. Economic growth requires efficient Islamic banking, costly and profitly. This paper is a literature review that aims to investigate the dynamics of input and output variables in Islamic banking efficiency research in Indonesia. The sample data used were 65 journal papers selected purposively with the initial assistance of the Publish or Perish software. The time span of the publication year of the sample paper is 2007-2021. The analytical method used is bibliometric and content analysis. From the results of the analysis found the existence of dynamics in the selection of input and output variables in research on the efficiency of Islamic banking in Indonesia. There is a tendency for research on the efficiency of Indonesian Islamic banking that leads to the selection of approaches , certain input variables and output variables, namely the intermediary approach. Deposits, labor costs, fixed assets, operational costs, and total assets became the five main rankings of the input variables chosen by researchers throughout the year of publication. From the output point of view, financing and operating income are the two dominant variables that are often used. The selection of methods, approaches, and input-output variables of Islamic banking efficiency research is highly dependent on the level of preference of each researcher. In the end, there were at least two gaps that were found, which could become opportunities for future research on the efficiency of Islamic banking, namely: 1) not absorbing the elements of banking modernity, and 2) not touching the Islamic values ​​that inherently becomes the face of Islamic banking in the implementation of daily operations.
 Keywords: Islamic banking, Literature review, Input variable, Output variable, Efficiency

Determinan Efisiensi Bank Umum Syariah di Indonesia dengan Profitabilitas sebagai Pemoderasi

This paper explores the Effect of Asset Diversification, Capital Adequacy Ratio (CAR), Credit Risk, and Liquidity on the Efficiency of Islamic Commercial Banks in Indonesia with Profitability as Moderating Variable and Bank Size as Control Variable during 2014-2018 .Based on the purposive sampling method, 12 banks were selected. This study uses multiple linear regression as a method of data analysis. The results showed that asset diversification and credit risk moderated by profitability had an insignificant negative effect on efficiency. Credit risk and CAR had an insignificant positive effect on efficiency. Meannwhile liquidity, capital adequacy ratio moderated by profitability have significant negative effect on efficiency,. Furthermore, asset diversification moderated by profitability, Liquidity moderated by profitability, and Bank Size (Size) have a significant positive effect on efficiency. The results of this study are expected to be a reference regarding the efficiency of Islamic commercial banks.

The Influence of Banking Risk on Efficiency: The Moderating Role of Inflation Rate

The increasing business activities of state-owned banks in Indonesia increases risks. This circumstance can impact the level of state-owned banks’ efficiency. Thus, this research analyses the influence of banking risks on the state-owned banks’ efficiency in Indonesia from 2016 to 2019. Moreover, inflation as one of the macroeconomic factors may also affect the relationship between banking risks and efficiency; hence, this research also examines the inflation role as a moderating variable of this relationship. The samples of this research are all state-owned banks in Indonesia. Ordinary Least Squares (OLS) regression analysis shows that liquidity risk and credit risk have positive and significant influences on efficiency. However, inflation as a moderating variable has no significant influence on efficiency. Inflation also fails to moderate the relationship between liquidity risk and efficiency of state-owned banks in Indonesia. Nevertheless, inflation successful moderates the relationship between credit risk and efficiency.

MSME lending and bank efficiency: Evidence from Indonesia

Banks prefer to lend to bigger clients for a variety of reasons, including transaction costs and risk considerations. Due to this phenomenon, the Central Bank of Indonesia issued a regulation that requires banks to channel a minimum proportion of their credit portfolio to micro, small, and medium enterprises (MSMEs). Nevertheless, the impact of channeling funds to MSMEs remains a subject of controversy, in part depending on the dimensions and metrics used. This study examines how MSME lending affects the efficiency of banks in Indonesia, a country where MSMEs constitute more than 99% of business entities. Using a total of 175 panel data observations of banks in Indonesia from 2014–2018, banks’ cost efficiency is first estimated using a stochastic frontier approach (SFA). Panel data regression is used to examine the impact of MSME lending on efficiency. The result of this study shows a significant and positive impact of the proportion of MSME lending on bank efficiency, which indicates that requiring banks to channel funds to MSMEs does not only potentially support economic development, but also is beneficial from the business perspective in the Indonesian context. AcknowledgmentThe research was also made possible with the support of PUTI Grant by Universitas Indonesia No. NKB-2036/UN2.RST/HKP.05.00/2020.

Analisis Determinan Efisiensi Perbankan di Indonesia

This study aims to determine the extent of the influence of bank size (total assets), capital adequacy (CAR) and credit risk (NPL) on banking efficiency in Indonesia. Banking efficiency in this study uses the BOPO indicator. This research is classified into descriptive and inductive research. The data used in this study is secondary data in the form of panel data on 27 conventional commercial banks in Indonesia from 2010 to 2019 obtained from the Financial Services Authority (OJK). This study uses a panel regression analysis method. The results of the study using the Fixed Effect Model (FEM) show that: (1) Bank size (total assets) has a negative and insignificant effect on bank efficiency in Indonesia, (2) Capital adequacy (car) has a negative and insignificant effect on bank efficiency. negative and insignificant to bank efficiency in Indonesia, (3) Credit risk (NPL) has a negative and significant effect on bank efficiency in Indonesia. (4) Bank size (total assets), Capital adequacy (car) and credit risk together significant effect on banking efficiency in Indonesia.

Financial Inclusion and Bank Efficiency in Indonesia

The aim of this study is to find out the effect of financial inclusion on bank efficiency in Indonesia. Data from 26 banks for the period of 2011 to 2016 is used to measure bank efficiency using Data Envelopment Analysis (DEA). While the data from the World Bank is used to calculate the ratio of outstanding loans of small and medium enterprises to total outstanding loans in banks to measure financial inclusion index. Panel data regression is done to analyze the effect and the result shows that financial inclusion has a positive and significant effect on bank efficiency where an increase in financial inclusion could improve bank efficiency. The result implies that the government must present a conducive financial environment for the implementation of the SNKI program that can improve financial inclusion and bank efficiency.

Empirical Study of Bank Efficiency in Indonesia

To be able to achieve the best level of efficiency, the bank must be able to manage the inputs owned and the outputs produced in between. In addition, banks must also be able to manage operational costs and operating income. In this analysis of efficiency is calculation of the ratio between input and output variables. This research is using non-parametric Data Envelopment Analysis (DEA) for bank in Indonesia in group level two (BUKU II) banks which registered at IDX with period of analysis. To analyze its efficiency by using intermediary and production approach. The sample analysis are taken from all population banks in BUKU II that already go public, which consist of two sharia banks, and sixteen conventional banks (four foreign banks, one state-owned bank and eleven national private banks). The results of the study indicate that there are several banks that are able to achieve a level of efficiency both using the intermediation approach and also the production approach. There were two foreign banks that were able to achieve efficiency levels. only one foreign bank was able to achieve efficiency levels. Banks was able to reach the level of efficiency. There were three banks that were able to achieve a level of efficiency using the intemediation and production approach, namely one Sharia bank and two foreign banks. The results of this study are expected to be useful for evaluating the level of efficiency that occurs in banks in Indonesia

The efficiency of commercial banks in Indonesia

The efficiency of commercial banks in Indonesia

Measuring Regional Islamic Bank Efficiency in Indonesia

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ANALISIS FRONTIER EFFICIENCY INDUSTRI PERBANKAN INDONESIA DENGAN MENGGUNAKAN METODE DISTRIBUTION FREE APPROACH

As an intermediary institution, bank has a very vital role in the economic development of a country so bank has to operate efficiently. The efficiency analysis can be conducted with the three approaches, namely cost efficiency, profit efficiency, and alternative profit efficiency. The three approaches can measured with two methode, parametric and non parametric. By using parametric methode (Distribution Free Approach), cost efficiency of 107 commercial banks operating for 10 years (2002- 2011), the average cost efficiency of banks in Indonesia is 0.6729. While the average value of the profit efficiency in Indonesian banks is 0.96363 or more efficient than cost efficiency. The score of alternative profit efficiency Indonesian banks is 0.965957. The cost efficiency of commercial banks on average have no strong correlation with all financial ratios of banks. The profit efficiency have a strong relationship with financial ratios ROA and BOPO. Financial performance of the bank's ROE ratio has a moderate correlation with the level of profit efficiency. While the level of alternative profit efficiency have a strong relationship with financial performance ratios ROE, ROA, and ROA. NIM ratio has a low relationship with alternative profit efficiency. Keyword: Distributin Free Approach, Cost Efficiency, Profit Efficiency, and Alternative Profit Efficiency.

ANALISIS FRONTIER EFFICIENCY INDUSTRI PERBANKAN INDONESIA DENGAN MENGGUNAKAN METODE DISTRIBUTION FREE APPROACH

As an intermediary institution, bank has a very vital role in the economic development of a country so bank has to operate efficiently. The efficiency analysis can be conducted with the three approaches, namely cost efficiency, profit efficiency, and alternative profit efficiency. The three approaches can measured with two methode, parametric and non parametric. By using parametric methode (Distribution Free Approach), cost efficiency of 107 commercial banks operating for 10 years (2002- 2011), the average cost efficiency of banks in Indonesia is 0.6729. While the average value of the profit efficiency in Indonesian banks is 0.96363 or more efficient than cost efficiency. The score of alternative profit efficiency Indonesian banks is 0.965957. The cost efficiency of commercial banks on average have no strong correlation with all financial ratios of banks. The profit efficiency have a strong relationship with financial ratios ROA and BOPO. Financial performance of the bank's ROE ratio has a moderate correlation with the level of profit efficiency. While the level of alternative profit efficiency have a strong relationship with financial performance ratios ROE, ROA, and ROA. NIM ratio has a low relationship with alternative profit efficiency. Keyword: Distributin Free Approach, Cost Efficiency, Profit Efficiency, and Alternative Profit Efficiency.

FOREIGN BANK PENETRATION AND ITS IMPACT ON BANKING INDUSTRIES

The purpose of this study is to measure the impact of penetration of foreign banks in the Indonesian banking industry. The measured effects are limited to competition and efficiency during the years 2000-2011, during which was a recovery from the economic crisis in Indonesia. Panzar-Rosse measures the competition and Conjectural Variation approaches. The efficiency is measured by the Standard Profit Efficiency approach. By using panel regression method with SUR (Seemingly Unrelated Regression), we found that penetration of foreign banks will increase competition and efficiency of banking in Indonesia, especially to medium and small banks through spillover effect on domestic banking system. The increase in total assets, total loans and the amount of third party funds held by foreign banks in Indonesia will increase competition and efficiency of banks in Indonesia.

Analysis of Islamic Banking Efficiency Using Maqashid Shariah Approach (Study on Islamic Banks in Indonesia and Malaysia)

Objective - This research aims to analyse the efficiency of Islamic banking in Indonesia and Malaysia based on the maqashid shariah approach. Methodology/Technique - This research uses individual education, creation of justice, and achievement of welfare to measure the efficiency variable. The research period covers the period from 2011 to 2015, using data envelope analysis (DEA). Findings - The result show that there are three (3) Islamic banks that achieve maximum efficiency in Malaysia. These are: Affin Islamic Bank Berhad, which achieved maximum efficiency in terms of distribution and profitability output, CIMB Islamic Bank, which achieved maximum efficiency in terms of distribution output, and RHB Islamic Bank Berhad, which achieved maximum efficiency in terms of distribution output. Meanwhile, two (2) Islamic banks which were considered to be efficient, although not at the maximum level. Novelty - This study shows that Bank Panin Syariah achieves maximum efficiency with respect to distribution output, and that Bank Mega Syariah is considered efficient with respect to profitability output and personal revenue output. Type of Paper - Empirical Keywords: Islamic Banks; Efficiency; Maqashid Shariah; DEA; Indonesia; Malaysia. JEL Classification: G20, G21.

Efficiency of banks in Southeast Asia: Indonesia, Malaysia, Philippines and Thailand

Purpose The purpose of this paper is to use the concept of meta-frontiers data envelopment analysis (DEA) to compare the technical efficiencies of banks in selected Southeast Asia countries in the periods of 1998-2012. Design/methodology/approach The authors evaluate bank efficiency in Indonesia, Malaysia, Thailand and the Philippines by means of DEA, and the authors employ a meta-frontiers approach to calculate efficiency scores in a cross-country setting. Findings The analysis shows that even there are some similarities in the process of financial reforms undertaken in the selected countries, the observed efficiency levels of banks vary substantially across the market. Originality/value It is crucial to take into consideration of different technologies in explaining the efficiency differences.

Determinants of Efficiency of Islamic Banks : Indonesian Evidence

This study attempts to investigate the efficiency of Islamic banks in Indonesia and its determinants over the period of 2004-2014. Eleven full Islamic banks were selected for the sample. This study employs the Data Envelopment Analysis (DEA) in first stage of the analysis based on two inputs (fixed assets and deposits) and one output (financing income). Panel data regression is then employed in the second stage of analysis. This study finds that the efficiency scores of Islamic banks in Indonesia range from 61.4% to 96.4% between 2004-2014 with an overall efficiency of 75.6%. Regression analysis suggests that the efficiency of Islamic banks in Indonesia is negatively influenced by factors suchs as GDP growth, exchange rate and trade freedom while positively related with profitability, financing intensity, capitalization and non-financing expenses.