NDLI: Banking efficiency and stock market performance: an analysis of listed Indonesian banks

Content Provider	Springer Nature Link
Author	Hadad, Muliaman D. Hall, Maximilian J. B. Kenjegalieva, Karligash A. Santoso, Wimboh Simper, Richard
Copyright Year	2010
Abstract	The main purpose of this paper is to examine the monthly profit-based technical efficiency and productivity of listed Indonesian banks and their market performance. We examined the banks through the prism of two modelling techniques, efficiency and super-efficiency, over the period January 2003 to end-July 2007. Within this research strategy we employed Tone’s (2001) non-parametric, Slacks-Based Model (SBM) and Tone’s (2002) super-efficiency SBM to estimate the bank efficiencies. They were then combined with recent bootstrapping techniques, namely the non-parametric truncated regression analysis suggested by Simar and Wilson (2007), to identify the determinants of the efficiency scores. With respect to the latter, in the case of the SBM efficiency scores, the Simar and Wilson methodology was adapted to two truncations, whereas in the super-efficiency framework the original technique was utilised. The first part of the analysis reveals that listed banks’ average efficiencies varied widely over the sample period, from a low of 34% to a high of 97%, with only one bank having a score in excess of unity under the super-efficiency framework. The two most efficient banks were domestically owned. With respect to the truncated regression analysis, we found that the banks’ efficiency scores were positively correlated with share prices and return on equity in all models, and with the log of total assets in the super-efficiency analysis. Moreover, it was found that the JCI index of the Indonesian Stock Exchange is positively related to bank efficiency in all models. Another interesting finding is that the coefficient for the share of foreign ownership is negative and statistically significant in the super-efficiency modelling. This suggests that Indonesian banks with foreign ownership tend to be less efficient than their domestic counterparts. Finally, Malmquist productivity results suggest that, over the study’s horizon, the sample banks displayed volatile productivity patterns in their profit-generating operations.
Starting Page	1
Ending Page	20
Page Count	20
File Format	PDF
ISSN	0924865X
Journal	Review of Quantitative Finance and Accounting
Volume Number	37
Issue Number	1
e-ISSN	15737179
Language	English
Publisher	Springer US
Publisher Date	2010-07-18
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Indonesian banking Emerging markets Productivity Efficiency Accounting/Auditing Finance/Investment/Banking Operations Research/Decision Theory Econometrics
Content Type	Text
Resource Type	Article
Subject	Finance Accounting

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