Efficiency and Competition in Banking Industry: Case for ASEAN-5 Countries

Ulik Hertina Wuni Astuti () and Putu Mahardika Adi Saputra ()
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Ulik Hertina Wuni Astuti: University of Brawijaya; Indonesia
Putu Mahardika Adi Saputra: University of Brawijaya; Indonesia

Scientific Annals of Economics and Business (continues Analele Stiintifice), 2019, issue 2, 141-152

Abstract: This paper analyzes the level of the efficiency and competition (market structure) of ASEAN-5 banking industry from 2005 until 2016. Two methods were employed, i.e. Stochastic Frontier Analysis and Adjusted Lerner Index. The former is utilized to measure the bank efficiency in ASEAN-5 countries and the latter is applied to measure the bank competition (market structure) in ASEAN-5 banking industry. In order to connect the efficiency and competition level of ASEAN-5 banking industry, this study also utilizes quadrant analysis based on three different periods, namely the period before the global crisis (2005-2008), the period after global crisis (2009-2015), and the period after the establishment of ASEAN Economic Community –AEC- (2016). The results reveal that on average, the efficiency and the competition level of banks in ASEAN-5 countries are found to be relatively high. The competition in ASEAN-5 banking industry could be classified as monopolistic where each bank competes by diversifying their products or segments.

Keywords: bank; efficiency; competition; Adjusted Lerner Index; ASEAN. (search for similar items in EconPapers)
JEL-codes: D24 D40 G21 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:aic:saebjn:y:2019:i:2:astutiusw

DOI: 10.2478/saeb-2019-0011

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