The Prospect of Dual Unit Banking System in Indonesian Regional Banking

Mala, Chajar Matari Fath

doi:10.18535/afmj/v2i1.05

Cited by 3 publications

(4 citation statements)

References 2 publications

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“…However, a few important aspects of phenomenon are the existence of global crisis that occurred during 2008-2010 and the implementation of Indonesian Banking Architecture during 2004-2012. Often it is believed that market share of individual Indonesian banking has a negative influence on profitability. This research is in accordance with Mala (2017) and Jumono et al (2016) which stated Indonesian banking has oligopoly market structure and it is apparently the strongest factor which influences banking performance.…”

Section: Asian Economic and Financial Reviewsupporting

confidence: 91%

Determinants of Profitability in Banking Industry: A Case Study of Indonesia

Jumono

Sugiyanto

Mala

2019

Asian Economic and Financial Review

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The purpose of this study is to investigate the determinants of profitability in Indonesian banking industry. This research defines profitability as basic earning power (BEP) and return on equity (ROE) with variables like basic condition, market structure, banking characteristics and performance as its determinants. Both credit market and deposit market channel of Indonesian banking were used to analyze the data. The Structure-Conduct Performance (SCP) paradigm was used to offer theoretical perspective. Data was collected through purposive sampling technique, randomly picked from Indonesian banks financial statements during 2001-2014. The dynamic panel GMM-Arellanno Bond was used as the tool analysis. The results show that basic condition, market structure, banking characteristic, and performance significantly influence profitability. Based on this result, the study recommends that Indonesian banking segment should improve its market structure through enhancement of performance particularly that of individual banks. It also recommends that regulations and policy planning of national banking industry should be directed to retaining and increasing profitability without relying on market power, nor requiring collusion or high interest to get higher profit. The implication of the current research will be seen in judging the durability of bank profitability and finding means to make it strong enough despite the influence of crisis, money market and inflation, although it may be still sensitive to exchange rate volatility. Contribution/ Originality:This study contributes to the existing literature since the determinants of banking profitability are seen holistically in this study. Based on Structure-Conduct-Performance (SCP) versus Efficiency Structure Hypothesis (ESH) Paradigm test, this study has attempted to detect the condition of the Indonesian Banking Industry, whether it is still collusive or has gained efficiency in the current time.

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Section: Asian Economic and Financial Reviewsupporting

confidence: 91%

Determinants of Profitability in Banking Industry: A Case Study of Indonesia

Jumono

Sugiyanto

Mala

2019

Asian Economic and Financial Review

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“…For the amount of credit disbursed, it can be seen in the Loan Deposit Ratio (LDR). If the value is > 100%, then the bank is classified as the oligopoly type Mala (2017). A bank like this will continue to strive to increase the Herfindahl-Hirschman Index (HHI) value so that it remains the leader in its industry.…”

Section: Discussionmentioning

confidence: 99%

“…A bank like this will continue to strive to increase the Herfindahl-Hirschman Index (HHI) value so that it remains the leader in its industry. Monopolistic banks will maximize the value of ROA by increasing CAR, tightening Non-Performing Loans (NPL), and increasing LDR Mala (2017).…”

Section: Discussionmentioning

confidence: 99%

“…Research conducted by Mala (2017) and Jumono et al (2016) show that Indonesia banking industry is an oligopoly market and Return On Asset can influence industrial banking performance. However, Mulyaningsih & Daly (2012) conclude that banks in Indonesia were in a monopolistic condition during [2001][2002][2003][2004][2005][2006][2007][2008][2009].…”

Section: Introductionmentioning

confidence: 99%

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Industry Market Structure and Banking Performance in Indonesia

Setyawan

Ekadjaja

2022

Acad. J. Interdiscip. Stud.

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After the economic crisis, Indonesian banks began to compile the Indonesian Banking Architecture to design the Indonesian banking system. Banks mostly have a motive to increase their market share by increasing the amount of third-party funds and the amount of credit extended, thus changing the character of the banking market structure in Indonesia. This research measures the effect of performance as reflected in the level of bank profitability in relation to the market structure by assuming that these conditions are influenced by internal (Asset Liability Management) and market factors. Bank market concentration is measured by the Herfindahl-Hirschman Index. This research concludes that the Indonesian banking industry has a monopolistic market structure. The effect of bank market concentration, capital ratio, and liquidity ratio are positive and significant on bank performance. Conversely, the credit risk ratio has a negative effect on banking performance. Received: 31 August 2021 / Accepted: 11 February 2022 / Published: 5 March 2022

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Bank specific determinants of EU banks profitability after 2007 financial crisis

Ercegovac

Klinac

Zdrilić

2020

Management (Split, Online)

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The basic purpose of the paper is to research determinants on profitability indicators of the banks in the European Union. Analysed bank profitability indicators considered as a standard are: the return on total bank assets (ROA) and return on total bank equity (ROE). The research model of bank profitability determinants is developed by analysing the systemically important, quoted banks in the European Union, in the 2007–2019 period, by using an adequate panel data analysis technique. The empirical evidence is in line with the initial assumptions: the efficiency of the banking firm, measured by the cost to income ratio and the non-performing loans ratio, has a significant influence on bank profitability, both on ROA and ROE. In the post-crisis period, banking firms ask for efficient cost management in achieving performance objectives. Additional important empirical results of research are the absence of impact of assets size and regulatory capital ratio on profitability indicators. The most important contribution of the paper is related to the sample definition, variable selection and explanatory power of the presented model in explaining global banking tendencies.

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The Prospect of Dual Unit Banking System in Indonesian Regional Banking

Cited by 3 publications

References 2 publications

Determinants of Profitability in Banking Industry: A Case Study of Indonesia

Determinants of Profitability in Banking Industry: A Case Study of Indonesia

Industry Market Structure and Banking Performance in Indonesia

Bank specific determinants of EU banks profitability after 2007 financial crisis

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