| Summary: | Recently, several banks developed merger and acquisition activities in Indonesian banking
industries. With consideration of a change in the ownership of a bank, the development of
merger and acquisition activities influence the performance of a bank. This is reasonable, since
the owner of a bank has authority to control bank policy in the future. Therefore, it is interesting
to examine the correlation between bank performance and ownership structure, post merger and
acquisition activities in Indonesia.
This study uses 459 observations of data from 32 banks that conducted mergers and acquisitions
activities in Indonesia during the period of 2005-2010. This research finds that the relationship
between ownership structure and performance of banks on Capital Adequacy Ratio, Non
Performing Loan, Return On Asset and Operating Income Operating Expenses, is relatively low.
Therefore, it can be concluded that there is less correlation between ownership structure and
bank performance. The regression analysis also shows that the composition of ownership and
number of ownership influence the performance bank on Capital Adequacy Ratio (CAR), Non
Performing Loan (NPL), Return On Asset (ROA) and efficiency on Operating Income to
Operating Expense (OIOE) significantly.
In sum, this research illustrates that fundamental factors in the condition of the bank must be
considered by owners and management of the bank in predicting the performance of banks postmerger
and acquisitions. Therefore, Bank Indonesia as the regulator authority of banking and
financial system in Indonesia needs to strengthen the system of banking supervision system and
implement the regulation particularly with Merger, Acquisition and Consolidation.
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