ANALYZING INDONESIAN CONVENTIONAL BANK EFFICIENCY BY USING DATA ENVELOPMENT ANALYSIS (DEA)

• Main Author: Sofian Prabowo (NIM 19014047), Dicky
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/21737
• Institution: Institut Teknologi Bandung

As one of promising emerging-economies, Indonesia faces a lot of challenges, including <br /> <br /> compete with ASEAN banks in 2020 when ASEAN Banking Integration Framework (ABIF) <br /> <br /> being applied. So far Indonesia’s banking industry has low competitiveness compare to ot her <br /> <br /> ASEAN banking industries. Low competitiveness reflected by its high lending rate and high <br /> <br /> efficiency ratio (higher efficiency ratio means lower efficiency performance). High lending rate <br /> <br /> makes Indonesian banks less preferable in making loan for borrowers. Indonesia lending rate is <br /> <br /> 3 <br /> <br /> rd <br /> <br /> highest in the region and its efficiency is one of the poorest among other ASEAN countries. <br /> <br /> Efficiency measures how well a bank can produce output over its input. Efficiency is one of the <br /> <br /> best measurements to see a bank performance. Bank Indonesia (BI) and Otoritas Jasa Keuangan <br /> <br /> (OJK) have been attempting to spur Indonesia banking efficiency using regulation and giving <br /> <br /> incentives for whom willing to be efficient. <br /> <br /> This research aims to measure Indonesian conventional bank efficiency using Data <br /> <br /> Envelopment Analysis (DEA) with asset approach, Variable Return to Scale (VRS) model and <br /> <br /> input orientation. The observed bank are 57 Indonesian conventional bank and are categorized <br /> <br /> based on their BUKU. From the DEA calculation the number of efficient banks from every <br /> <br /> BUKU as follow : 3 out of 4 from BUKU 4, 7 out of 15 from BUKU 3, 7 out of 24 from <br /> <br /> BUKU 2 and 4 out of 15 from BUKU 1. The research also found that in average BUKU 4 has <br /> <br /> the best efficiency score followed by BUKU 3, BUKU 1 and BUKU 2