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Banking Industry Competition In Indonesia

Author

Listed:
  • Ratna Sri Widyastuti
  • Boedi Armanto

Abstract

This paper analyzes the competition level of banking industry, prior and after the introduction of Indonesian Banking Architecture (API). Using panel data, the result shows the competition of banking decreased after the introduction of API, with large tendency to monopoly or collusive olligopoly. For the bank with niche market such as regional bank and mix bank, the introduction of API did not affect much, while the competition level for foreign bank is the lowest one. Non price variable would be the main determinant on banking competition in the future, including number of branches, wage and credit volume.

Suggested Citation

  • Ratna Sri Widyastuti & Boedi Armanto, 2013. "Banking Industry Competition In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 15(4), pages 401-434, April.
    • Handle: RePEc:idn:journl:v:15:y:2013:i:4i:p:401-434
    DOI: https://doi.org/10.21098/bemp.v15i4.433
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    References listed on IDEAS

    as
    1. David A. Alhadeff, 1951. "The Market Structure of Commercial Banking in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 65(1), pages 62-86.
    2. Juan Fernández de Guevara & Joaquín Maudos & Francisco Pérez, 2005. "Market Power in European Banking Sectors," Journal of Financial Services Research, Springer;Western Finance Association, vol. 27(2), pages 109-137, April.
    3. Claessens, Stijn & Laeven, Luc, 2004. "What Drives Bank Competition? Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 563-583, June.
    4. Lester V. Chandler, 1938. "Monopolistic Elements in Commercial Banking," Journal of Political Economy, University of Chicago Press, vol. 46(1), pages 1-1.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    banking competition; market structure; Indonesian Banking Architecture (API);
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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