ABSTRACT
This study compares the efficiency of different groups of ownership and bank size and investigates the productivity change during the period, pursuant to fulfilment of regulations issued in 2012 concerning “Business Activities and Office Networks Based on Bank Core Capital” and “Minimum Capital Adequacy Requirement for Commercial Banks” that ignite the change of banks’ strategy, capitals, and ownership, as well as attracting merger and acquisitions with more foreign investments. The measurement method of the bank efficiency adopts the two-stage network data envelopment analysis (DEA) model developed by Liang et al. (2008) to obtain intermediation and operational efficiencies to establish the overall bank efficiency. The boot-strapped truncated regression algorithm as proposed by Simar and Wilson (2007) was employed to examine the exogenous factors to the efficiencies. The study employs 105 conventional banks operating in Indonesia since 2013, which suggests Indonesia banking efficiencies have been improving, as evidenced with improving overall efficiency scores and the gap efficiencies between intermediary and operating functions narrowed during the observed period (2013–2018), and the study concluded that bank size affects those efficiencies.
