Fakultas Ekonomi - Doktor Ilmu Manajemen, JOBMAN Vol. 1 No. 1, Januari 2014 (Views: 1221)

DETERMINANTS OF EFFICIENCY AND ITS IMPACT ON THE PERFORMANCE OF BANKING INDUSTRY PROFITABILITY IN

Subandi

ABSTRAK

The Objective of this study is to estimate the factors influencing the level of technical efficiency of banks as measured by a non-parametric Data Envelopment Analysis (DEA) and its impact on the profitability performance as measured by return on assets (ROA). This study applies to panel data regression models with random effects approach to 110 conventional bank over 2006-2010. Based on estimation of the determinants of bank efficiency levels, it can be informed that bank size factors, types of banks, capital adequacy ratio, loans deposit ratio, operating expenses and net interest margin affect the level of technical efficiency significantly. At a later stage, estimation of the determinants of profitability shows that the factors that influencing the bank size, types of banks, non-performing loans, loans deposit ratio, operating expenses and net interest margin significantly affect ROA. This study has implications both theoretically and managerially. Theoretical implications for this research provide an important contribution to the development of the theory of efficiency and financial performance. Finnaly the managerial implications of this research have the consequences of improving the efficiency and profitability performance, especially for the domestic banks.

Kata kunci: Technical Efficiency, Data Envelopment Analysis, Profitability

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