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Determinant of regional development bank efficiency for their sustainability issues

Author

Listed:
  • Sulaeman Rahman Nidar

    (Padjadjaran University, Indonesia)

  • Mokhamad Anwar

    (Padjadjaran University, Indonesia)

  • Ratna Komara

    (Padjadjaran University, Indonesia)

  • Layyinaturrobaniyah Layyinaturrobaniyah

    (Padjadjaran University, Indonesia)

Abstract

Banking efficiency is the main factor that needs to be considered in creating banking competitiveness. This study aims to determine the efficiency of the Regional Development Banks (RDBs) in Indonesia. There are around 26 RDBs throughout Indonesia, however, due to the completeness of the data as the main criteria of this purposive sampling research, this study includes 19 RDBs in observations. This study adopts a quantitative analysis with multiple regressions. There are only 2 variables that significantly affect efficiency, namely the Operational Cost to Operational Income (OCOI) variable and the Loan to Deposit Ratio (LDR) variable, and the other variables do not have any significant effects on the efficiency. In general, the dependent variable can be explained simultaneously by the independent variables around 95%, and the remaining 5% is explained by other variables outside the model. Since only 7 RDBs are efficient, then it is necessary for the management of those banks to do hard effort to maintain efficiency and keep on as sustainable banking in this competitiveness era.

Suggested Citation

  • Sulaeman Rahman Nidar & Mokhamad Anwar & Ratna Komara & Layyinaturrobaniyah Layyinaturrobaniyah, 2020. "Determinant of regional development bank efficiency for their sustainability issues," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 1133-1145, September.
    • Handle: RePEc:ssi:jouesi:v:8:y:2020:i:1:p:1133-1145
    DOI: 10.9770/jesi.2020.8.1(76)
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    1. Victoria Kuzenkova, 2021. "Effective Development Institutions," Public administration issues, Higher School of Economics, issue 5, pages 161-175.

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    More about this item

    Keywords

    efficiency; regional development banks; operational cost to operational income; loan to deposit ratio;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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