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Bank Ownership and Efficiency in the Aftermath of Financial Crises: Evidence from I ndonesia
Author(s) -
Parinduri Rasyad A.,
Riyanto Yohanes E.
Publication year - 2014
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12071
Subject(s) - financial crisis , panel data , financial system , foreign ownership , economics , joint venture , monetary economics , stochastic frontier analysis , business , frontier , cost efficiency , finance , macroeconomics , econometrics , commerce , foreign direct investment , production (economics) , computer science , operating system , history , archaeology
This paper examines the relationship between types of ownership of banks and their efficiency in the aftermath of a financial crisis using G reene's “true” panel data stochastic frontier model, which takes into account unobserved heterogeneity among banks. The I ndonesian banking sector is analyzed using financial data of 144 banks operating in I ndonesia over the period of 2000 Q 4–2005 Q 2. 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.