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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/26791/1/International_Journal_of_E_%26_F_Studies%5B1%5D.pdf
http://irep.iium.edu.my/26791/
http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/2012_2/buyung_sarita.pdf
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spelling my.iium.irep.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 REM 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
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
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/26791/1/International_Journal_of_E_%26_F_Studies%5B1%5D.pdf
http://irep.iium.edu.my/26791/
http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/2012_2/buyung_sarita.pdf
_version_ 1643609207349444608
score 13.211869

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