Title: Impact of regulation and supervision on Indonesian banks' scale efficiency, 2002-2011

Authors: Noraya Soewarno; Hamdi Ali

Addresses: Maastricht School of Management, Endepolsdomein 150, 6229 EP Maastricht, Netherlands ' Maastricht School of Management, Endepolsdomein 150, 6229 EP Maastricht, Netherlands

Abstract: The banking sector is one of the most regulated industries and the impact of regulation and supervision on banks' performance are mixed, some positive and others negative. Hence, empirical studies become all the more important to assist banking authorities in their regulatory and supervisory roles to produce informed policy decisions. We examine the impact of bank regulation and supervision on bank scale efficiency over the period 2002-2011. Scale efficiency allows banks to operate at optimum scale, allowing banks to optimise performance. The overall results of our study showed that there is significant impact of bank regulation and supervision on scale efficiency. As far as we know, this study is unprecedented in the Indonesian context.

Keywords: bank regulation; bank supervision; bank efficiency; scale efficiency; panel data; Indonesia; banking industry.

DOI: 10.1504/IJEPEE.2016.081410

International Journal of Economic Policy in Emerging Economies, 2016 Vol.9 No.4, pp.404 - 424

Available online: 06 Jan 2017 *

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