Bank Ownership and Efficiency in the Aftermath of Financial Crises: Evidence from Indonesia

14 Pages Posted: 23 Jan 2014

See all articles by R. A. Parinduri

R. A. Parinduri

Nottingham University Business School, Malaysia Campus

Yohanes E. Riyanto

Nanyang Technological University (NTU) - Division of Economics

Date Written: February 2014

Abstract

This paper examines the relationship between types of ownership of banks and their efficiency in the aftermath of a financial crisis using Greene's “true” panel data stochastic frontier model, which takes into account unobserved heterogeneity among banks. The Indonesian banking sector is analyzed using financial data of 144 banks operating in Indonesia over the period of 2000Q4–2005Q2. In the aftermath of the 1997 Asian financial crisis, the cost efficiency of all banks improves over time on average. However, there is some evidence that, as these banks improve their efficiency, state‐owned banks are the least efficient banks while joint‐venture and foreign‐owned banks are the most efficient.

Suggested Citation

Parinduri, Rasyad A. and Riyanto, Yohanes E., Bank Ownership and Efficiency in the Aftermath of Financial Crises: Evidence from Indonesia (February 2014). Review of Development Economics, Vol. 18, Issue 1, pp. 93-106, 2014. Available at SSRN: https://ssrn.com/abstract=2383601 or http://dx.doi.org/10.1111/rode.12071

Rasyad A. Parinduri

Nottingham University Business School, Malaysia Campus ( email )

Wisma MISC
No. 2 Jalan Conlay
Kuala Lumpur, Selangor 43500
Malaysia

Yohanes E. Riyanto

Nanyang Technological University (NTU) - Division of Economics ( email )

HSS 04-53, 14 Nanyang Drive
Singapore, 639798
Singapore

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