Open AccessIndustry Market Structure and Banking Performance in Indonesia
Author(s) -
Ignatius Roni Setyawan,
Margarita Ekadjaja,
Agustin Ekadjaja
Publication year - 2022
Publication title -
academic journal of interdisciplinary studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.148
H-Index - 5
eISSN - 2281-3993
pISSN - 2281-4612
DOI - 10.36941/ajis-2022-0056
Subject(s) - indonesian , business , financial system , market liquidity , profitability index , capital adequacy ratio , market concentration , market share , monopolistic competition , index (typography) , market structure , banking industry , monetary economics , finance , economics , market economy , industrial organization , monopoly , philosophy , linguistics , world wide web , computer science , incentive
After the economic crisis, Indonesian banks began to compile the Indonesian Banking Architecture to design the Indonesian banking system. Banks mostly have a motive to increase their market share by increasing the amount of third-party funds and the amount of credit extended, thus changing the character of the banking market structure in Indonesia. This research measures the effect of performance as reflected in the level of bank profitability in relation to the market structure by assuming that these conditions are influenced by internal (Asset Liability Management) and market factors. Bank market concentration is measured by the Herfindahl-Hirschman Index. This research concludes that the Indonesian banking industry has a monopolistic market structure. The effect of bank market concentration, capital ratio, and liquidity ratio are positive and significant on bank performance. Conversely, the credit risk ratio has a negative effect on banking performance. Received: 31 August 2021 / Accepted: 11 February 2022 / Published: 5 March 2022