IDEAS home Printed from https://ideas.repec.org/p/osf/inarxi/aruzq.html
   My bibliography  Save this paper

Technical Efficiency and the Determinants of Price to Book Value: An Empirical Study of Category-IV Banks in Indonesia Stock Exchange

Author

Listed:
  • setiawan, chandra
  • Tjiasaka, Felicia Putri

Abstract

This research aimed to empirically determine the value relevance of price to book value (PBV) and technical efficiency (TE) within Category-IV banks in Indonesia Stock Exchange in the time horizon of 1Q2007 to 4Q2015. This research uses time series and quarterly-published financial statement from the listed Category-IV banks. In term of variables that determine PBV by using panel least square, the research reveals that pre-provision operating profit (PPOP) and return on total assets (ROTA) have positive and significant effect towards PBV, while non-performing loan (NPL) and dividend yield have negative and significant effect towards PBV. Contrarily, firm size has negative and insignificant effect towards PBV. Additionally, the result of data envelopment analysis (DEA) which is used to measure technical efficiency, indicates that PT. Bank Mandiri Tbk. (BMRI) is the most efficient Category-IV bank. BMRI led with average technical efficiency score of 98.95%, followed by PT. Bank Rakyat Indonesia Tbk. (BBRI) 98.02%, PT. Bank Negara Indonesia Tbk. (BBNI) 96.04% and PT. Bank Central Asia Tbk. 94.94%. The average technical efficiency of Category-IV banks within the period of research is 96.99%.

Suggested Citation

  • setiawan, chandra & Tjiasaka, Felicia Putri, 2017. "Technical Efficiency and the Determinants of Price to Book Value: An Empirical Study of Category-IV Banks in Indonesia Stock Exchange," INA-Rxiv aruzq, Center for Open Science.
    • Handle: RePEc:osf:inarxi:aruzq
    DOI: 10.31219/osf.io/aruzq
    as

    Download full text from publisher

    File URL: https://osf.io/download/59eb2ff46c613b02622e98ef/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/aruzq?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bader, Mohammed Khaled I. & Mohamad, Shamsher & Ariff, Mohamed & Hassan, Taufiq, 2008. "Cost, Revenue, And Profit Efficiency Of Islamic Versus Conventional Banks: International Evidence Using Data Envelopment Analysis," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 15, pages 24-76.
    2. Shinta Amalina Hazrati Havidz & Chandra Setiawan, 2015. "Bank Efficiency and Non-Performing Financing (NPF) in the Indonesian Islamic Banks," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 3(3), pages 61-79.
    3. Berger, Allen N. & DeYoung, Robert, 1997. "Problem loans and cost efficiency in commercial banks," Journal of Banking & Finance, Elsevier, vol. 21(6), pages 849-870, June.
    4. Jing Yang & Kostas Tsatsaronis, 2012. "Bank stock returns, leverage and the business cycle," BIS Quarterly Review, Bank for International Settlements, March.
    5. repec:idn:journl:v:17:y:2015:i:4d:p:1-24 is not listed on IDEAS
    6. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    7. Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993. "The efficiency of financial institutions: A review and preview of research past, present and future," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 221-249, April.
    8. Fama, Eugene F, 1991. "Efficient Capital Markets: II," Journal of Finance, American Finance Association, vol. 46(5), pages 1575-1617, December.
    9. Stijn Claessens & Neeltje van Horen, 2015. "The Impact of the Global Financial Crisis on Banking Globalization," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(4), pages 868-918, November.
    10. Mohd Zaini Abd Karim & Sok-Gee Chan & Sallahudin Hassan, 2010. "Bank Efficiency and Non-Performing Loans: Evidence from Malaysia and Singapore," Prague Economic Papers, Prague University of Economics and Business, vol. 2010(2), pages 118-132.
    11. Shinta Amalina Hazrati Havidz & Chandra Setiawan, 2015. "Bank Efficiency and Non-Performing Financing (NPF) in the Indonesian Islamic Banks," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 3(3), pages 61-79, September.
    12. Muliaman D. Hadad & Maximilian J. B. Hall & Wimboh Santoso & Ricky Satria & Karligash Kenjegalieva & Richard Simper, 2008. "Efficiency in Indonesian Banking: Recent Evidence," Discussion Paper Series 2008_13, Department of Economics, Loughborough University, revised Nov 2008.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hassan Mohamed Mohamed Hafez, 2018. "Examining the Relationship between Efficiency and Capital Adequacy Ratio: Islamic versus Conventional Banks --- An Empirical Evidence on Egyptian Banks," Accounting and Finance Research, Sciedu Press, vol. 7(2), pages 232-232, May.
    2. Ihsen Abid & Mohamed Goaied & Mouldi Ben Ammar, 2019. "Conventional and Islamic Banks’ Performance in the Gulf Cooperation Council Countries; Efficiency and Determinants," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(3), pages 623-665, September.
    3. Fadzlan Sufian & Fakarudin Kamarudin & Nor Halida Haziaton Mohd Noor, 2012. "Determinants of Revenue Efficiency in the Malaysian Islamic Banking Sector محددات كفاءة الإيرادات في القطاع المصرفي الماليزي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 25(2), pages 199-228, July.
    4. Hasan, Iftekhar & Lozano-Vivas, Ana, 2002. "Organizational Form and Expense Preference: Spanish Experience," Bulletin of Economic Research, Wiley Blackwell, vol. 54(2), pages 135-150, April.
    5. Bos, J.W.B. & Schmiedel, H., 2007. "Is there a single frontier in a single European banking market?," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2081-2102, July.
    6. Julien Reynaud & Rofikoh Rokhim, 2005. "Do banking crises enhance efficiency? A case study of 1994 Turkish and 1997 Indonesian crises," Cahiers de la Maison des Sciences Economiques bla05007, Université Panthéon-Sorbonne (Paris 1).
    7. Белоусова В. Ю., 2009. "Эффективность Издержек Однородных Российских Коммерческих Банков: Обзор Проблемы И Новые Результаты," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 13(4), pages 489-519.
    8. Kwan, Simon H., 2006. "The X-efficiency of commercial banks in Hong Kong," Journal of Banking & Finance, Elsevier, vol. 30(4), pages 1127-1147, April.
    9. Hasan, Iftekhar & Marton, Katherin, 2003. "Development and efficiency of the banking sector in a transitional economy: Hungarian experience," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2249-2271, December.
    10. Fadzlan Sufian & Muzafar Shah Habibullah, 2012. "Developments in the efficiency of the Malaysian banking sector: the impacts of financial disruptions and exchange rate regimes," Progress in Development Studies, , vol. 12(1), pages 19-46, January.
    11. Kai Sun & Ruhul Salim, 2020. "A semiparametric stochastic input distance frontier model with application to the Indonesian banking industry," Journal of Productivity Analysis, Springer, vol. 54(2), pages 139-156, December.
    12. Belousova, Veronika & Karminsky, Alexander & Kozyr, Ilya, 2018. "The macroeconomic and institutional determinants of the profit efficiency frontier for Russian banks," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 49, pages 91-114.
    13. Fadzlan Sufian, 2016. "Financial Crisis, Exchange Rate Regimes, Organizational Forms, and Bank Efficiency: Does Globalization Matter?," Emerging Economy Studies, International Management Institute, vol. 2(1), pages 27-71, May.
    14. Amel, Dean & Barnes, Colleen & Panetta, Fabio & Salleo, Carmelo, 2004. "Consolidation and efficiency in the financial sector: A review of the international evidence," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2493-2519, October.
    15. Alandejani, Maha & Asutay, Mehmet, 2017. "Nonperforming loans in the GCC banking sectors: Does the Islamic finance matter?," Research in International Business and Finance, Elsevier, vol. 42(C), pages 832-854.
    16. Trofimov, Ivan D. & Md. Aris, Nazaria & Ying Ying, Jovena Kho, 2018. "Determinants of Commercial Banks' Profitability in Malaysia," MPRA Paper 85598, University Library of Munich, Germany.
    17. Ramcharran, Harri, 2017. "Bank lending to small business in India: Analyzing productivity and efficiency," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 16-24.
    18. Rao, Ananth, 2005. "Cost frontier efficiency and risk-return analysis in an emerging market," International Review of Financial Analysis, Elsevier, vol. 14(3), pages 283-303.
    19. Fadzlan Sufian & Muzafar Shah Habibullah, 2010. "Financial Disruptions and the Evolution of Malaysian Banking Sector’s Efficiency: A Non-Stochastic Frontier Approach," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 166-186.
    20. Chau Le & Aleksandar Šević & Panayiotis G. Tzeremes & Trong Ngo, 2022. "Bank efficiency in Vietnam: Do scale expansion strategies and non‐performing loans matter?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 822-843, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:inarxi:aruzq. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://ios.io/preprints/inarxiv/discover .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.