Siahaan, Antonius TP. The Impact of Diversification on Efficiency, Analysis of Indonesian Banking Industry. International Journal of Innovation, Creativity and Change. ISSN 2201-1323 (In Press)
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Abstract
The objective of this research is to examine the Indonesian banking industry diversification strategy towards efficiency from 2014 – 2018. The present study aims to measure banks’ effectiveness as financial intermediaries with income diversification, loan diversification, and technology diversification as dependent variables, with return on assets, non-performing loan ratio, loan to deposit ratio, and bank size as control variables. To measure the firms' efficiency, this research uses a non-parametric measurement called data envelopment analysis input-oriented method. Two models are being used: constant return to scale (CRS) and variable return to scale (VRS). For measuring diversification, this research will use the Hirschman-Herfindahl Index to find the relationship between firms' efficiency, firm diversification strategy, and the control variables. This research will use panel data regression. Finally, the result of this research is Indonesian banking efficiency has not increased every year, and only loan diversification seems to affect efficiency significantly. This research suggests that firms should consider diversifying their loan distribution to get a maximum performance efficiency result. Key words: Efficiency, Diversification, Data Enveloping Analysis, Intermediation Approach, Hirschman-Herfindahl Index, Return on Assets, Non-Performing Loan, Loan to Deposit Ratio, Assets Size.
| Item Type: | Article |
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| Subjects: | H Social Sciences > HG Finance > HG1501-3550 Banking |
| Depositing User: | Antonius Siahaan |
| Date Deposited: | 09 Apr 2023 02:08 |
| Last Modified: | 09 Apr 2023 02:08 |
| URI: | http://repository.sgu.ac.id/id/eprint/2483 |
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