Assessing Banking Profit Efficiency Using Stochastic Frontier Analysis

Hendrawan, Riko; Nasution, Azhar A.

doi:10.35609/jfbr.2018.3.4(5)

Cited by 4 publications

(4 citation statements)

References 11 publications

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“…BRI is the only bank that gets the maximum score, with a relative efficiency value equal to one during the study period. This result is in line with the research by Kristianto and Hendrawan (2020) and Hendrawan and Nasution (2018) where BRI is the most efficient bank compared to other banks during the study period, while BCA Syariah has the lowest efficiency score with an average value of 0.59. Meanwhile, based on observations during the research period, the average value of banking efficiency in Indonesia fluctuates every year.…”

Section: Efficiency Level Of Indonesian Bankssupporting

confidence: 91%

The efficiency level of Indonesian banks in the Covid-19 pandemic era and its determinant

Ikhwan¹,

Riani²

2022

J. Eko. Keu. Isl.

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Purpose – This study aims to measure the efficiency level of Indonesian Banking in the period 2015-2020, especially in the year 2020 when the Covid-19 pandemic began to spread in Indonesia. In addition, the efficiency determinant was further analyzed to find some factors that affect banking efficiency.Methodology – Non-parametric approach-Data Envelopment Analysis (DEA) and Tobit Regression were employed as the research methods to determine determinants that affect efficiency level.Findings – The findings show that the efficiency level of Indonesian Banks experienced a decreasing trend in 2020. The impact of Covid-19 on banking efficiency was also confirmed by RTS, which was included in the Decreasing Return to Scale (DRS) category. Islamic banking scored a higher score of 0.66 than conventional banking, with a score of 0.59. In addition, Indonesian Banks' most crucial variable to be improved during the pandemic is total financing. This study also found that ROA and LDR/FDR significantly affects banking efficiency. Therefore, Indonesian Banks should maintain and increase their bank profitability and financing distributions to improve their efficiency.Implication – This research can be used as guidelines for policymakers, especially bank management, to improve their weaknesses in terms of banking efficiency. Originality – This study was the first research that focuses on measuring the efficiency of Islamic banks compared to conventional banks in Indonesia during the Covid-19 and precisely measures the bank's internal factors affecting bank efficiency.

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Section: Efficiency Level Of Indonesian Bankssupporting

confidence: 91%

The efficiency level of Indonesian banks in the Covid-19 pandemic era and its determinant

Ikhwan¹,

Riani²

2022

J. Eko. Keu. Isl.

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“…Another empirical study by Wahab and Haron (2017) confirms that efficiency is a benchmark in determining the optimal input to realize the intended output magnitude. Efficiency in the banking industry will show the ability of banks to maximize production by using existing resources Nasution., 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Examining the Efficiency of the Islamic Banking Industry: Comparison of the Covid-19 Period and The New Normal Era in Indonesia

Ikhsan,

Muzakkar,

Saputra

et al. 2023

IEFR

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This study aims to examine the efficiency of the Islamic banking industry: a comparison of the COVID-19 period and the new normal era in Indonesia. This study uses Data Envelopment Analysis (DEA) applications that use Variable Return to Scale (VRS) to see the ability of banks to manage input and output variables, especially total financing in Islamic banking in Indonesia. The results of this study show that the average efficiency level of Islamic banks in Indonesia fluctuated during the period before COVID-19 until the New Normal Era. Interestingly, this study found that the overall efficiency level of Islamic banking in Indonesia shows an increasing trend in 2022 with an average efficiency value of 0.66. However, from 2019 to 2020 it experienced a very significant decline. Bank Mualamah Syariah is the bank with the highest efficiency value according to DEA, while Bank BRI Syariah and Bank Tabungan Pensiunan Nasional Syariah have the lowest value. Keywords: Efficiency, Islamic Banking, Data Envelopment Analysis (DEA), Covid-19

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“…Another empirical study by Lucchetti et al, (2001) asserts that bank efficiency is related to economic growth. Efficiency at the bank will demonstrate the bank's ability to maximize production using existing resources (Hendrawan & Nasution, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

The impact of Covid-19 on the banking industry efficiency: Comparison between Indonesia and Malaysian banks

Riani¹,

Ikhwan

2022

Asian. J. Islam. Manag.

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Purpose − This study aims to measure and compare the efficiency of Islamic and conventional banks in Indonesia and Malaysia, from 2015 to 2020.Methodology − Data Envelopment Analysis (DEA) was employed as a research method for measuring efficiency. The DEA results are also used to identify input or output variables that must be improved if the Decision-Making Unit (DMU) needs to improve efficiency in form of potential improvement.Findings − This study shows that Covid-19 had an impact on decreasing the efficiency level of Indonesian and Malaysian Banks. This study also shows that Indonesian Banks are relatively efficient compared to Malaysian Banks. Nevertheless, Islamic bank is more affected by Covid-19 compared to conventional. In addition, the most important variable performance to be improved by banks during the Covid-19 pandemic is total financing.Implication − It can be used as a guideline for both nations to improve their shortcomings in each type of bank and to strengthen the banking system during economic downturns in order to speed up the recovery process.Originality − This is the initial study to examine the banking efficiency of Indonesia and Malaysia during the covid pandemic-induced economic crisis. As a result, it is expected to capture the impact of the covid-19 epidemic on banking efficiency.

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Assessing Banking Profit Efficiency Using Stochastic Frontier Analysis

Cited by 4 publications

References 11 publications

The efficiency level of Indonesian banks in the Covid-19 pandemic era and its determinant

The efficiency level of Indonesian banks in the Covid-19 pandemic era and its determinant

Examining the Efficiency of the Islamic Banking Industry: Comparison of the Covid-19 Period and The New Normal Era in Indonesia

The impact of Covid-19 on the banking industry efficiency: Comparison between Indonesia and Malaysian banks

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