Does Banking in Indonesia tend to be Concentrated?

Maharani, Novita Kusuma dan Sumardi, Sumardi dan Salisu, Auwal (2019) Does Banking in Indonesia tend to be Concentrated? Jurnal Ekonomi dan Bisnis Islam, 4 (2). ISSN 2527-3434

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Abstract

The banking in Indonesia has undergone several changes in the market structure that
ultimately impacts the prevailing policies and regulations. This study aims to
examine the impact of changes in the banking market structure identified through
the level of market concentration in the banking environment and examine the
factors that influence the level of concentration of the banking market from 2005 to
2016. The study also examined the impact of changes in banking structure during
the global crisis. The measurement of banking concentration used in this study is the
Herfindahl-Hirschman Index (HHI). Furthermore, the influential factors consist of:
(1) Bank specification, including bank size (Size), credit risk (NPL), profitability
(ROE), banksoundness(CAR),(2)Market specification,namely the number of
standingbank (NUM), and (3) Global crisis. The study used GLS (Generalized
Least Square) method to detect autocorrelation on each variable.The results show
that banks in Indonesia tended to have a low level of market concentration. The
results are also in accordance with the SCP paradigm which states that banks tend to
generate high profits when the level of banking market concentration is high

Item Type:	Article
Depositing User:	ST Bahar Sobari
Date Deposited:	13 Jan 2020 05:13
Last Modified:	15 Jan 2020 05:34
URI:	http://repository.uhamka.ac.id/id/eprint/835

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