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Evolution in the efficiency of the Indonesian banking sector: a DEA approach

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  • Fadzlan Sufian

Abstract

The paper provides empirical evidence on the evolution of the Indonesian banking sector's efficiency during the post Asian financial crisis period of 1999-2008. The efficiency estimates of individual banks are evaluated by using the data envelopment analysis (DEA) approach. The estimates of technical efficiency (TE) were observed to be consistently higher under intermediation approach vis-a-vis revenue approach. The empirical findings suggest that under the intermediation approach, the Indonesian banking sector's inefficiency stems largely from pure technical rather than scale, while scale inefficiency seem to outweigh pure technical inefficiency under the revenue approach.

Suggested Citation

  • Fadzlan Sufian, 2010. "Evolution in the efficiency of the Indonesian banking sector: a DEA approach," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 2(4), pages 388-414.
    • Handle: RePEc:ids:injams:v:2:y:2010:i:4:p:388-414
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    Citations

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    Cited by:

    1. Yang, Xiaopeng & Morita, Hiroshi, 2013. "Efficiency improvement from multiple perspectives: An application to Japanese banking industry," Omega, Elsevier, vol. 41(3), pages 501-509.
    2. Roland Banya & Nicholas Biekpe, 2018. "Banking efficiency and its determinants in selected frontier african markets," Economic Change and Restructuring, Springer, vol. 51(1), pages 69-95, February.
    3. Xiaopeng Yang & Hiroshi Morita, 2012. "A DEA model with identical weight assignment based on multiple perspectives," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 4(1), pages 18-35.
    4. Fadzlan Sufian & Fakarudin Kamarudin, 2017. "Forced Mergers on Bank Efficiency and Productivity: Evidence from Semi-parametric Malmquist Productivity Index," Global Business Review, International Management Institute, vol. 18(1), pages 19-44, February.

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