Ownership structure and bank performance

Abstract

The purpose of this study is to evaluate the performance of banks in Indonesia. Specifically, this study has examined the static effect of ownership structure on bank performance in Indonesia over the period 1995–2006. The sample consists of 74 banks, namely 56 private banks, 15 community development banks (BPD), and three federal banks from 1995 to 2006. The data was analyzed using least-squares regression method, the general least squares method, and the method of random effects. The findings of this study show that the BPD performed better compared to private banks. This indicates that BPDs have better performance rather than private banks which is due to the fact that customers can be able to pay loans, they have special knowledge on that area and the performance of BPD is supervised by local government. In addition, the amount of equity, economic growth, financial crisis, and the financial ratios affect the performance of the bank. However, bank status has no effect on bank performance.

Do Foreign Firms Bring Value to Emerging Financial Market? (An Empirical Evidence Indonesia Banking)

“…The research summary show in table 6. Reference [11], [8], [14], [17], [4], and [16] Profitability Significant on Return on Equity, Return on Assets and Economic Value Added)…”

“…Research on foreign shareholder's value creation is still uncommon, especially in banking of developing countries like Indonesia. Among some examples are Johan et al [4], Batten et al [5], Dong et al [6], Ghosh [7], Bongini et al [8], Mori et al [9], Saif-Alyousfi et al [10], Agustin et al [11], Azoury et al [12], Shawtari [13], Basri et al [14], Kowaleski [15], and Rathnayake et al [16].…”

“…Agustin et al [11] evaluate the performance of banks in Indonesia. The study has examined the static effect of ownership structure on bank performance in Indonesia over the period 1995-2006.…”