BANKING EFFICIENCY ANALYSIS OF CONVENTIONAL BANKS AND ISLAMIC BANKS IN INDONESIA FROM 2012-2017 USING DEA

• Main Author: Rizkia Azhahra (19015057), Devi
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26540
• Institution: Institut Teknologi Bandung

Banking is one of the pillars of economic growth and national stability to improve people's lives <br /> <br /> from the financial sector. If we look at the history of Indonesian banking, conventional banks were <br /> <br /> operated much earlier than islamic bank. Islamic bank was newly established on 1992 while Conventional <br /> <br /> banks was operated longer than Islamic Bank. Until now, banking industry in Indonesia is dominated by <br /> <br /> the conventional banking market. But along with the development of the banking world and the needs of <br /> <br /> the muslim majority in Indonesia to obtain financial services that are based on the principles of Islam <br /> <br /> which is the principle of profit sharing, the government published the Act No.7 of 1992 on banking. In <br /> <br /> conducting its operational activities the bank must work efficiently in order to grow faster and survive <br /> <br /> amid market competition. In such circumstances, the assessment of bank efficiency becomes important <br /> <br /> since efficiency is a performance picture of the bank. <br /> <br /> This study measure VRS efficiency and CRS efficient of two group of banks that are conventional banks <br /> <br /> and islamic banks in Indonesia for period 2012-2017. The method used is non-parametric frontier <br /> <br /> method using data envelopment analysis (DEA) with three input variables, total deposit, labor cost and <br /> <br /> fixed assets and two input variable, total loans and total income. This study used intermediation approach <br /> <br /> with output orientation. The finding of the study show that conventional banks were more efficient rather <br /> <br /> than Islamic banks.