Title: Regional banks and market power: evidence from Indonesia

Authors: Irwan Trinugroho; Sutaryo; Sylviana Maya Damayanti; Sudarso Kaderi Wiryono; Linggar Ikhsan Nugroho

Addresses: Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36 Surakarta, 57126, Indonesia ' Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36 Surakarta, 57126, Indonesia ' School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha No.10 Bandung, 40132, Indonesia ' School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha No.10 Bandung, 40132, Indonesia ' Faculty of Economics and Business, Universitas Sebelas Maret, Jl. Ir. Sutami 36 Surakarta, 57126, Indonesia

Abstract: This paper investigates market power difference between regional banks and other banks in the context of Indonesia over the period of 2001-2009 resulting in 641 observations. Further, we also examine the determinants of market power of regional banks by considering local institutional development. According to the univariate and multivariate tests, we do find that Indonesian regional banks have a larger market power than other commercial banks. However, contrary to our expectation, in the regions with poor governance, market power of those banks is lower than that of well-governed regions. Similarly, socio-economic development is positively linked to the market power of regional banks.

Keywords: regional banks; market power; Indonesia; institutional development; socio-economic development.

DOI: 10.1504/IJMEF.2018.092352

International Journal of Monetary Economics and Finance, 2018 Vol.11 No.2, pp.126 - 139

Received: 12 Oct 2016
Accepted: 22 Oct 2016
Published online: 16 Jun 2018 *

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