The Analysis of Factors that Influence Relative Efficiency of General Banks after the Implementation of Indonesia Banking Architecture

14 Pages Posted: 19 Jun 2014

See all articles by Bertha Elizabet

Bertha Elizabet

Padjadjaran University - Faculty of Economics and Business

Nanny Dewi

Padjadjaran University - Faculty of Economics and Business

Aldrin Herwany

Perbanas Institute; Perbanas Institute

Date Written: November 12, 2013

Abstract

One of implementations that is done by Bank Indonesia to reach the vision of Arsitektur Perbankan Indonesia (API) is by determining anchor bank criteria and good performance bank criteria. Those criterias are determined from various aspects such as some ratios that consist of CAR, NPL, LDR, ROA, and the banking assets. These determinations are expected to be an encouragement for banks in Indonesia to improve the banking efficiency. The measurement and the efficiency analysis are done by implementing Data Envelopment Analysis (DEA) method through the approach of efficiency intermediation that is oriented toward output. This efficiency value will be the dependent variable in analysing the next regression that is done by applying the tobit regression. The independent variables that are applied in the regression are CAR, NPL, LDR, ROA, asset, SBI rate, inflation, and the Rupiah exchange toward Dollar. This research involves 108 conventional banks during 2004-2011 in Indonesia. The result of the efficiency measurement showed that Indonesia banking is not efficient in doing its function as the financial intermediator. The hypothesis testing result from tobit regression showed that the variables that influence the bank efficiency with 5% signification are CAR, NPL, the exchange rate, SBI rate, and inflation. Macro variables has bigger and more significant influence toward the intermediation efficiency compared with micro variables. Among micro variables CAR, LDR, NPL, ROA, and total asset, only CAR and NPL have significant influence in affecting intermediation efficiency. It happens because the measurement that is used in efficiency inputs outputs are partial finance ratio where banks can manage it, so that the real bank performance can not reflected well.

Keywords: Efficiency, Data Envelopment Analysis, Tobit, and Indonesia banking Architecture (API)

Suggested Citation

Elizabet, Bertha and Dewi, Nanny and Herwany, Aldrin, The Analysis of Factors that Influence Relative Efficiency of General Banks after the Implementation of Indonesia Banking Architecture (November 12, 2013). Available at SSRN: https://ssrn.com/abstract=2455845 or http://dx.doi.org/10.2139/ssrn.2455845

Bertha Elizabet

Padjadjaran University - Faculty of Economics and Business ( email )

Jalan Dipati Ukur No. 46 Bandung
Jalan Dipati Ukur No. 35 Bandung
Bandung, West Java 40132
Indonesia

Nanny Dewi

Padjadjaran University - Faculty of Economics and Business ( email )

Jalan Dipati Ukur No. 46 Bandung
Jalan Dipati Ukur No. 35 Bandung
Bandung, West Java 40132
Indonesia

Aldrin Herwany (Contact Author)

Perbanas Institute ( email )

Jalan Perbanas, Karet Kuningan, Setiabudi
Jakarta, Jakarta 12940
Indonesia

Perbanas Institute ( email )

Jakarta, DKI Jakarta
Indonesia

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