Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis

This paper examines determinants of bank performance in Indonesia for the period of 1994-1999. It was pooled cross-sectional time series and dynamic panel data models. This research incorporates the traditional Structure-Conduct- Performance (SCP) and Relative Efficiency (RE) hypotheses. The esti...

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Main Authors:	Sarita, Buyung, Zandi Pour Joopari, GholamReza, Shahabi, Alireza
Format:	Article
Language:	English
Published:	Social Sciences Research Society 2012
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/26791/ http://irep.iium.edu.my/26791/ http://irep.iium.edu.my/26791/1/International_Journal_of_E_%26_F_Studies%5B1%5D.pdf

id	iium-26791
recordtype	eprints
spelling	iium-267912012-11-20T07:56:08Z http://irep.iium.edu.my/26791/ Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis Sarita, Buyung Zandi Pour Joopari, GholamReza Shahabi, Alireza HG1501 Banking This paper examines determinants of bank performance in Indonesia for the period of 1994-1999. It was pooled cross-sectional time series and dynamic panel data models. This research incorporates the traditional Structure-Conduct- Performance (SCP) and Relative Efficiency (RE) hypotheses. The estimation results show that bank performance industry is competitive, and implies that market structure in Indonesian banking sector is nearly perfect competition. However, no evidence has been found in this study in support of the traditional SCP, while RE is otherwise. The negative relationship between loans to business groups and bank performance, which is likely due to the high loans provided to them, thus supporting the moral hazard hypothesis. The negative relationship between market share loan and return on assets, the negative relationship between debt-to-total assets and bank performance is likely because of the high level of debt. The negative relationship between debt-to-total assets and bank performance in a scenario of high interest rates indicates that banks acted responsibly by paying high interest charges prevailing at that time. This also results in the negative relationship between capital adequacy ratio and bank performance. Social Sciences Research Society 2012 Article PeerReviewed application/pdf en http://irep.iium.edu.my/26791/1/International_Journal_of_E_%26_F_Studies%5B1%5D.pdf Sarita, Buyung and Zandi Pour Joopari, GholamReza and Shahabi, Alireza (2012) Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis. International Journal of Economics and Finance Studies, 4 (2). pp. 41-55. ISSN 1309-8055 http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/2012_2/buyung_sarita.pdf
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Sarita, Buyung Zandi Pour Joopari, GholamReza Shahabi, Alireza Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis
description	This paper examines determinants of bank performance in Indonesia for the period of 1994-1999. It was pooled cross-sectional time series and dynamic panel data models. This research incorporates the traditional Structure-Conduct- Performance (SCP) and Relative Efficiency (RE) hypotheses. The estimation results show that bank performance industry is competitive, and implies that market structure in Indonesian banking sector is nearly perfect competition. However, no evidence has been found in this study in support of the traditional SCP, while RE is otherwise. The negative relationship between loans to business groups and bank performance, which is likely due to the high loans provided to them, thus supporting the moral hazard hypothesis. The negative relationship between market share loan and return on assets, the negative relationship between debt-to-total assets and bank performance is likely because of the high level of debt. The negative relationship between debt-to-total assets and bank performance in a scenario of high interest rates indicates that banks acted responsibly by paying high interest charges prevailing at that time. This also results in the negative relationship between capital adequacy ratio and bank performance.
format	Article
author	Sarita, Buyung Zandi Pour Joopari, GholamReza Shahabi, Alireza
author_facet	Sarita, Buyung Zandi Pour Joopari, GholamReza Shahabi, Alireza
author_sort	Sarita, Buyung
title	Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis
title_short	Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis
title_full	Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis
title_fullStr	Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis
title_full_unstemmed	Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis
title_sort	determinants of performance in indonesian banking: a cross-sectional and dynamic panel data analysis
publisher	Social Sciences Research Society
publishDate	2012
url	http://irep.iium.edu.my/26791/ http://irep.iium.edu.my/26791/ http://irep.iium.edu.my/26791/1/International_Journal_of_E_%26_F_Studies%5B1%5D.pdf
first_indexed	2023-09-18T20:39:51Z
last_indexed	2023-09-18T20:39:51Z
_version_	1777409292159156224

Determinants of performance in Indonesian banking: a cross-sectional and dynamic panel data analysis

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