Foreign participation and banking competition: Evidence from the Indonesian banking industry

Mulyaningsih, Tri; Daly, Anne; Miranti, Riyana

doi:10.1016/j.jfs.2015.02.001

Cited by 49 publications

(31 citation statements)

References 31 publications

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“…This is the case in Eastern Europe and Central Asia where a considerable number of regional studies derive results consistent with that proposition (Bonin, Hasan and Wachtel, 2005;Fries and Taci, 2005;Grigorian and Manole, 2006;Havrylchyk and Jurzyk, 2011), 9 as do country-level studies of Poland and the Czech Republic (Weill, 2003;Matousek and Taci, 2004;Havrylchyk, 2006), Hungary (Hasan and Marton, 2003;Majnoni, Shankar and Varhegyi, 2003), Croatia (Jemric and Vujcic, 2002;Kraft et al, 2006) and Turkey (Isik and Hassan, 2002). Similarly, in Asia, country case studies for Malaysia (Detragiache and Gupta, 2006;Matthews andIsmail, 2006), Thailand (Chantapong, 2005), Indonesia (Mulyaningsih, 2015) and Pakistan (Bonaccorsi di Patti and Hardy, 2005) find that foreign-owned banks are better performers. The findings are more ambiguous in China (Wu et al, 2007;Berger et al, 2009) and India (Bhattacharya et al 1997;Sensarma, 2006), where foreign bank participation remains limited.…”

Section: Bank Ownership Performance and Competition In The Domestic mentioning

confidence: 81%

Bank Ownership: Trends and Implications

Cull

Verrier²,

Pería³

2018

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The authors may be contacted at rcull@worldbank.org. This paper presents recent trends in government and foreign bank ownership across countries and summarizes the evidence regarding the implications of bank ownership structure for bank performance and competition, financial stability, and access to finance. The evidence reviewed suggests that foreign-owned banks tend to be more efficient than domestic banks in developing countries, promote competition in host banking sectors, and help stabilize credit when host countries face idiosyncratic shocks. But there are trade-offs, since foreign-owned banks can also transmit external shocks and might not always contribute to expanding access to credit. The record on the impact of government bank ownership suggests few benefits, especially for developing countries.

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Section: Bank Ownership Performance and Competition In The Domestic mentioning

confidence: 81%

Bank Ownership: Trends and Implications

Cull

Verrier²,

Pería³

2018

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“…After a severe crisis in 1998, the industry began to implement reforms. Capital adequacy regulation was modified to increase the quality of commercial banks in Indonesia (Hadad, Agusman, Monroe, Gasbaroo, & Zumwalt, 2011;Mulyaningsih, Daly, & Riyana, 2015). During the 2008 global economic crisis, the Indonesian banking industry was more prepared to manage the downturn as demonstrated by the number of bankrupt banks are fewer than that of the 1998 crisis.…”

Section: Introductionmentioning

confidence: 99%

Bank Performance and Its Underlying Factors: A Study of Rural Banks in Indonesia

Chou

Buchdadi

2016

AFR

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This study determines the effect of variables recommended by the central bank of Indonesia on the performance of rural banks (BPRs) which has the particularity that serve the needs of communities in rural areas, small and medium enterprises (SMEs) in the form of deposits (savings and time deposits) and credit. The analysis technique employed in this study is panel data regression using expenses ratio (BOPOs), capital adequacy ratios (CAR), nonperforming loans (NPLs), loan-to-deposit ratios (LDRs) as independent variables. Return on asset (ROA) and net interest margin ratio (NIM) are used as the proxies of BPRs performance. The data used are from 164 BPRs operating in Java island between 2009 and 2012 period (totaling 656 company years). The results showed that BOPOs and NPLs played crucial role in explaining the BPR performance in Indonesia. The findings in this study indicate that efficiency and prudence in management policies for banking industry in Indonesia becomes more important.

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“…Further, banking reform in October 1988 allowed foreign banks to establish joint venture banks, a partnership model with the domestic bank. The foreign banks could purchase shares of local banks in the stock market (Mulyaningsih et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…The domestic partner in joint-venture banks could not be able to recapitalize their equity, therefore banking regulator increases the percentage of foreign ownership from 85% to 99% (Havrylchyk and Jurzyt, 2011), which created more incentive for foreign banks to enter the market at lower cost by acquiring distressed bank (Hryckiewicz and Kowalewski, 2010). Eventually, among the 16 joint venture banks, foreign banks' participation increased substantially up to 99% (Mulyaningsih et al, 2015). Figure 1 shows the percentages of foreign banks' market share in Indonesia from 1984 to 2012.…”

Section: Introductionmentioning

confidence: 99%

Foreign Banks’ Presence and Domestic Bank Performance: Evidence from Indonesia

Mardiya

Trinugroho

2018

Etikonomi

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We examine the impact of foreign presence on domestic banks’ performance by studying conventional commercial banks in Indonesia. We use monthly financial information of 97 commercial banks from 2003 through 2013 resulting in 8,600 observations. We use a panel data regression (Panel Least Square method) to test our hypotheses. Our results show that overall, foreign presence decreases the performance of domestic banks. Going deeper, we find that foreign presence reduces state-owned banks’ profitability as well as private domestic banks’ profitability. However, there is no significant effect of foreign presence on the performance of regional development banks. Little evidence found on the effect of foreign presence on overhead cost.DOI:10.15408/etk.v17i2.7769

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Foreign participation and banking competition: Evidence from the Indonesian banking industry

Cited by 49 publications

References 31 publications

Bank Ownership: Trends and Implications

Bank Ownership: Trends and Implications

Bank Performance and Its Underlying Factors: A Study of Rural Banks in Indonesia

Foreign Banks’ Presence and Domestic Bank Performance: Evidence from Indonesia

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