A Comparison Study of Bank Efficiency in Indonesia Before and After Crisis in 2008 Based on Data Envelopment Analysis

DOI

10.2991/aebmr.k.210522.021How to use a DOI?

Keywords

Bank, Efficiency, Indonesia, Crisis, Data Envelopment Analysis, DEA

Abstract

During financial crisis, the profitability of businesses tend to decline. Therefore, managements aim to minimize inefficiencies in running their businesses. Using 35 banks in Indonesia, we analyze the crisis effect on bank’s efficiency before and after crisis in 2008. Methods used in this study are data envelopment analysis (DEA), Wilcoxon test, and analysis of variance which applied to accounting data spanning from 2006 to 2019. The result shows that most banks (43%-69%) are not efficient yet from 2006 to 2019. The majority of banks in Indonesia have not yet performed their function as an intermediary wherein they are not efficient enough to utilize their inputs to produce a certain level of output. This study shows significant differences between bank efficiency before and after crisis based on Wilcoxon test. This indicates that regulations and business models after crisis in 2008 have a significant impact on bank efficiency in Indonesia. Some variables (total assets, operating expenses, total revenues, and net income) show an increasing growth even after the crisis. On the other hand, this study shows there is no significant differences between bank efficiency based on BUKU (Bank Umum berdasarkan Kegiatan Usaha) or bank based on business activities based using analysis of variance. On average, large banks are more efficient even during the financial crisis. This study also shows there is no significant differences between bank efficiency based on capital adequacy ratio buffer using analysis of variances. However, this study shows that there is significant differences between bank efficiency based share ownership. Bank with majority of local ownership is found to be more efficient. This study shows that the regulatory framework seems to play a crucial role in the banks’ efficiency configuration. Regulators can design the policy to be more compatible and adaptable related with the issues happened. Hence, the policy needs to promote productivity, capitalization, and development whereas at the same time controlling its efficiency.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Cut Nabila Saraziva
AU  - Dony Abdul Chalid
PY  - 2021
DA  - 2021/05/25
TI  - A Comparison Study of Bank Efficiency in Indonesia Before and After Crisis in 2008 Based on Data Envelopment Analysis
BT  - Proceedings of the International Conference on Business and Engineering Management (ICONBEM 2021)
PB  - Atlantis Press
SP  - 154
EP  - 160
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.210522.021
DO  - 10.2991/aebmr.k.210522.021
ID  - Saraziva2021
ER  -