Profit efficiency of shariah banks in Indonesia and the determining factors: Using Stochastic Frontier Analysis Method
DOI:
https://doi.org/10.14414/jebav.v19i2.711Keywords:
efisiensi, bank syariah, stochasitic frontier approachAbstract
This study aims to measure the efficiency of profit and examine the factors that affect the efficiency of shariah banks profit in Indonesia such as the size of banks, risk financing, and capital adequacy. This study used the Shariah banks in Indonesia, during the period of 2010-2014. These shariah banks were selected as the sample Commercial shariah banks and Shariah Business Units. This study uses three stages of research. First, it measures the efficiency of profit using a parametric approach that is Stochastic Frontier Approach (SFA). Secondly, its uses regression profit efficiency scores with various determinants of profit efficiency. The third phase is testing the efficiency score during the global crisis (2008-2009) and after the global crisis period (2010-2014). It shows that in overall there occurred profit efficiency in the shariah banks in Indonesia as it was indicated by the score of profit efficiency that is less than one. The inefficiency occurred in both Shariah banks and shariah business units. Bank size has a positive impact on profit efficiency. The bigger the bank, the better profit efficiency is. It can be implied that this research provides the managers the clues that shariah banks should improve their profit efficiency management. For Bank Indonesia, they can use this evidence to design policies that can encourage profit efficiency in shariah banks.References
Aigner, D, CAK, Lovell and P, Schmidt 1977, Formulation and Estimation of Stochastic Frontier Production Function Models, Journal of Econometric, Vol. 6, pp. 21-37.
Akhigbe, A and Mc. Nulty, JE 2003, The profit efficiency of small US commercial banks, Journal of Banking and Finance, Vol. 27, No. 2, pp. 307- 325.
Altunbas, Y, Evans, L and Molyneux, P 2001, Bank ownership and efficiency, Journal of Money, Credit and Banking, Vol. 33, No. 4, pp. 926-954.
Bank Indonesia 2013, Ikhtisar Perbankan Indonesia.
Bank Indonesia 2013, Indikator Perbankan Nasional.
Bank Indonesia 2014, Outlook Perbankan Syariah 2014.
Bashir, AHM 1999, Risk and Profitability Measures in Shariah Banks: The Case of Two Sudanese Banks, Shariah Economic Studies, Vol. 6, No. 2, pp. 1–24.
Bashir, AHM 2001, Assessing the Performance of Shariah Banks: Some Evidence from the Middle East, in American Economic Association Annual Meeting, New Orleans, Louisiana.
Berger, AN, Hancock, D and Humphrey, DB 1993, Bank efficiency derived from the profit function, Journal of Banking and Finance, Vol. 17, No. 2, pp. 317-347.
Berger, AN and Mester, LJ 1997, Inside the black box: What explains differences in the efficiencies of financial institutions?, Journal of Banking & Finance, 21: 895-947.
Casu, B and Molyneux, P 2003, A comparative study of efficiency in European banking, Applied Economics, Vol. 35, No. 17, pp. 1865-1876.
Cebenoyan, AS, Cooperman, CA and Hudgins, SC 1993, The relative efficiency of stock vs. mutual S & Ls: A stochastic frontier approach, Journal of Financial Services Research, Vol. 7, pp. 151-1702.
Coelli, TJ 1996, A Guide to Frontier Version 4.1: A Computer Program for Stochastic Frontier Production and Cost Function Estimation, Vol. 7, No. 96, CEPA, Working Paper.
Cooper, M, Jackson, W and Patterson, G 2003, Evidence of predictability in the cross section of bank stock returns, Journal of Banking & Finance, Vol. 27, No. 5, pp. 817-850.
Drake, L and M Hall 2003, Efficiency in Japanese Banking: An Empirical Analysis, Journal of Banking and Finance, Vol. 27, pp. 891–917.
Fukuyama, H 1993, Technical and Scale Efficiency of Japanese Commercial Banks: A Non parametric approach, Applied Economics, Vol. 25, No. 8, pp. 1101-1112.
Kaparakis, EI, Miller, SM and Noulas, AG 1994, Short run cost inefficiency of commercial banks: A flexible stochastic frontier approach, Journal of Money, Credit & Banking, Vol. 26, pp. 875-893.
Karim, MZA 2001, Comparative bank efficiency across select ASEAN countries, ASEAN Economic Bulletin, Vol. 18, No. 3, pp: 289-304.
Kwan, S and Eisenbeis, RA 1997, Bank risk, capitalization, and operating efficiency, Journal of Financial Services Research, Vol. 12, No. 2, pp. 117-131.
Marie, Atea, A Nasser and M Ibrahim 2013, Operational, Profitability, Quality Performance of Dubai's Bank: Parallel Data Envelopment Analysis, Journal of Management Research, Vol. 12, No. 1, pp. 25-34.
Mester, LJ 1996, A study of bank efficiency taking into account risk preferences, Journal of Banking & Finance, Vol. 20, No. 6, pp. 1025-1045.
Muazaroh 2013, Pengukuran Efisiensi and Faktor Penentu Tingkat Efisiensi Bank di Indonesia, Dissertation, Program Doktor Universitas Gadjah Mada, Yogyakarta.
Nursyirwan, Andi Rahman 2010, Pengukuran kinerja bank umum syariah dan bank konvensional yang memiliki unit usaha syariah di Indonesia berdasarkan pendekatan efisiensi (Metode non parametrik data envelopment analysis), <http://respository.unad.ac.id/eprint/7490>.
Pratikno and Sugianto 2011, Kinerja Efisiensi Bank Syariah sebelum dan sesudah Krisis Global Berdasarkan Data Envelopment Analysis, Jurnal Ekonomi dan Bisnis, Vol. 16, No. 2, pp. 108 - 117.
Sarkar, J, Sarkar, S and Bhaumik, SK 1998, Does ownerships always matter, evidence from the Indian Banking Industry, Journal of Comparative Economics, Vol. 26, pp. 262-281.
Sarker, MAA 1999, Shariah Banking in Bangladesh: Performance, Problems, and Prospects, International Journal of Shariah Financial Services, Vol. 1, No. 3, pp. 15-36.
Wahyuni, Sri and Iwan, F 2008, Analisis Faktor-faktor yang Mempengaruhi Sustainability Ratio Perbankan Syariah di Indonesia, Research Report, LPPM Universitas Muhamadiayh Purwokerto.
Wahyuni, Sri 2014, The Factor that Affecting Sustainability Ratio Syaria Banking During The Global Financial Crisis, Prosiding, 2nd Asean International Conference on Shariah Finance, IAIN, Sunan Kalijaga.
Yudistira, D 2004, Eficiency in Shariah Banking: an Empirical Analysis on Eighteen Banks, Shariahs Economics Studies, Vol. 12, No. 1, pp. 1-19.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2017 Sri Wahyuni, Pujiharto Pujiharto
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
