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ISSN : 2456-3676

Title:
COMPARISON OF EFFICIENCY BETWEEN THAT STATE-OWNED BANKS AND FOREIGN?OWNED BANKS IN INDONESIA

Authors:
Jaelani, Indonesia

Abstract:
This study aimed to analyze the differences in the efficiency of that state-owned banks and foreign?owned banks in Indonesia in 2010 - 2014, based on the theory of asymmetry. This is consistent with the phenomenon of low efficiency of banks in Indonesia which is indicated by the ratio of BOPO (Operations Expenses to Operations Income) and NIM (Net Interest Margin) remains high. This study uses a quantitative approach, which measures the efficiency of the Bank using the Data Envelopment Analysis/DEA, with input- output variables selected by the intermediation approach. The results showed that the level of efficiency of the state?owned is better than the foreign?owned banks. This occurs because the foreign?owned banks in Indonesia in carrying out its operations faced with asymmetric information. The in-depth analysis shows that on the output side, the foreign?owned banks have the opportunity to optimize the entire output variable, while special the state?owned in fee based variable income, as evidence the state?owned are still too focused on traditional banking services compared to products of other banking services. Meanwhile, on the input side, the two types of banks should make savings in the management of third party funds, the use of labour and fixed assets in proportion. However, the state?owned have high inefficiency in the use of fixed assets compared to foreign?owned banks.

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