Title: Reexamine performance of foreign banks in Indonesia

Authors: Irwan Trinugroho; Sylviana Maya Damayanti; Sudarso Kaderi Wiryono; Mochammad Doddy Ariefianto

Addresses: 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 ' Indonesia Deposit Insurance Corporation, Jl. Jend. Sudirman Kav. 42-43, SCBD Lot 9 Jakarta 12190, Indonesia

Abstract: We reexamine the performance of multiple definitions of foreign banks in Indonesia over the period of September 2005-December 2013 in a monthly dataset. We use a number of definitions of foreign banks which are branches and subsidiaries of foreign banks (BSFB), joint venture banks (JVB) and domestic banks acquired by foreign investors (DBAFI). Unbalanced panel data estimation, more particular random effect, is employed to examine our hypothesis. We find that BSFB have a higher performance than other banks. However, little evidence is revealed for the joint venture and acquired banks. Encouraging banks, more particular domestic banks, to be more efficient should be bolstered by the regulators to lead them to be more profitable and competitive.

Keywords: foreign ownership; joint venture; acquired banks; bank performance; multiple identifications; Indonesia.

DOI: 10.1504/IJMEF.2018.10006617

International Journal of Monetary Economics and Finance, 2018 Vol.11 No.4, pp.317 - 326

Received: 09 Nov 2016
Accepted: 22 Nov 2016

Published online: 19 Oct 2018 *

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