Non-Parametric Analysis of Bank Efficiency: Performance Evaluation Before and after Listing at the Jakarta Stock Exchange

Abstract

This paper reports comparative measures using both financial and production efficiency as well as factors driving performance of publicly Indonesian listed banks over 2000-2005. The motivations for this investigation are: identify performance differences of the banks before and after listing at the Jakarta Stock Exchange (JSX), (b) examine whether the performance differences in any are dependent on the methodology applied. Both finance and production theories are used: financial ratios and data envelopment analysis (DEA). Findings reported in the paper would be very useful for describing the aspects investigated while economic/financial policy making could benefit from our findings reported in this study. The results suggest that there was a significant increase of bank’s efficiency after going public, which primarily due to assets efficiency. In addition, it also found that the DEA measure is not only comparable to the traditional accounting ratios, but also can help to identify policy relevant conclusions on how to evaluate performance of banks before and after listing at the stock market, by identifying the inefficiencies in the use of inputs.

Keywords: efficiency, data envelopment analysis, financial ratios, privatization

JEL Classification: C23, L33, G21