Factors Influencing Profit Efficiency of Banking in Indonesia
This study intends to test, analyze, and verify the influence of bank size, capital adequacy, liquidity, credit risk, and market power on commercial banks profitability. Quantitative research methods applied in this study are explanatory method, which aims to analyze the influence of independent var...
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| Format: | Article |
| Language: | English |
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Departemen Ilmu Ekonomi Fakultas Ekonomi dan Bisnis Universitas Airlangga
2018-12-01
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| Series: | JDE (Journal of Developing Economies) |
| Subjects: | |
| Online Access: | https://e-journal.unair.ac.id/JDE/article/view/9211 |
| _version_ | 1811230663088537600 |
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| author | Juliana Kadang Djoko Mursinto Rudi Purwono |
| author_facet | Juliana Kadang Djoko Mursinto Rudi Purwono |
| author_sort | Juliana Kadang |
| collection | DOAJ |
| description | This study intends to test, analyze, and verify the influence of bank size, capital adequacy, liquidity, credit risk, and market power on commercial banks profitability. Quantitative research methods applied in this study are explanatory method, which aims to analyze the influence of independent variables on dependent variable and descriptive method to describe the object studied. The study also applies Stochastic Frontier Analysis (SFA) approach to estimate the technical efficiency of commercial banks. The results show that bank size, capital adequacy (CAR), liquidity (LDR), credit risk (NPL) and market power significantly affect the profitability of commercial banks in Indonesia in the period of 2010-2016. The result of yearly financial report of each bank is caused by the fact that: 1). some banks are in the process of mergers; 2). the allowance for impairment losses on financial assets and non-financial assets increased primarily with banks in the merger process; 3). banks have credits in default status and under special surveillance with an increasing amount of credits from year to year.
Keywords: Profit Efficiency, Bank Size, Capital Adequacy, Liquidity, Credit Risk, and Market Power.
JEL Classification: G21, E22, G32, L11 |
| first_indexed | 2024-04-12T10:32:19Z |
| format | Article |
| id | doaj.art-292ede4d2c5f4a119bd189c8725a0645 |
| institution | Directory Open Access Journal |
| issn | 2541-1012 2528-2018 |
| language | English |
| last_indexed | 2024-04-12T10:32:19Z |
| publishDate | 2018-12-01 |
| publisher | Departemen Ilmu Ekonomi Fakultas Ekonomi dan Bisnis Universitas Airlangga |
| record_format | Article |
| series | JDE (Journal of Developing Economies) |
| spelling | doaj.art-292ede4d2c5f4a119bd189c8725a06452022-12-22T03:36:48ZengDepartemen Ilmu Ekonomi Fakultas Ekonomi dan Bisnis Universitas AirlanggaJDE (Journal of Developing Economies)2541-10122528-20182018-12-0132566410.20473/jde.v3i2.92117306Factors Influencing Profit Efficiency of Banking in IndonesiaJuliana Kadang0Djoko Mursinto1Rudi Purwono2https://orcid.org/0000-0002-4902-0745Faculty of Economics and Business, Airlangga University, IndonesiaFaculty of Economics and Business, Airlangga University, IndonesiaFaculty of Economics and Business, Airlangga UniversityThis study intends to test, analyze, and verify the influence of bank size, capital adequacy, liquidity, credit risk, and market power on commercial banks profitability. Quantitative research methods applied in this study are explanatory method, which aims to analyze the influence of independent variables on dependent variable and descriptive method to describe the object studied. The study also applies Stochastic Frontier Analysis (SFA) approach to estimate the technical efficiency of commercial banks. The results show that bank size, capital adequacy (CAR), liquidity (LDR), credit risk (NPL) and market power significantly affect the profitability of commercial banks in Indonesia in the period of 2010-2016. The result of yearly financial report of each bank is caused by the fact that: 1). some banks are in the process of mergers; 2). the allowance for impairment losses on financial assets and non-financial assets increased primarily with banks in the merger process; 3). banks have credits in default status and under special surveillance with an increasing amount of credits from year to year. Keywords: Profit Efficiency, Bank Size, Capital Adequacy, Liquidity, Credit Risk, and Market Power. JEL Classification: G21, E22, G32, L11https://e-journal.unair.ac.id/JDE/article/view/9211profit efficiencybank sizecapital adequacyliquiditycredit riskmarket power |
| spellingShingle | Juliana Kadang Djoko Mursinto Rudi Purwono Factors Influencing Profit Efficiency of Banking in Indonesia JDE (Journal of Developing Economies) profit efficiency bank size capital adequacy liquidity credit risk market power |
| title | Factors Influencing Profit Efficiency of Banking in Indonesia |
| title_full | Factors Influencing Profit Efficiency of Banking in Indonesia |
| title_fullStr | Factors Influencing Profit Efficiency of Banking in Indonesia |
| title_full_unstemmed | Factors Influencing Profit Efficiency of Banking in Indonesia |
| title_short | Factors Influencing Profit Efficiency of Banking in Indonesia |
| title_sort | factors influencing profit efficiency of banking in indonesia |
| topic | profit efficiency bank size capital adequacy liquidity credit risk market power |
| url | https://e-journal.unair.ac.id/JDE/article/view/9211 |
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