Technical Efficiency Determinants of the Indonesian Employer Pension Funds: A Double-Bootstrap DEA Analysis

Paskalis Seran, Apriani Dorkas Rambu Atahau, Supramono Supramono and Usil Sis Sucahyo

Chapter 11 in Handbook on Data Envelopment Analysis in Business, Finance, and Sustainability:Recent Trends and Developments, 2024, pp 349-376 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The world’s aging population requires a robust and effective pension system, yet research on its efficiency is limited. This research examines the technical efficiency determinants of pension funds using financial data on 40 Indonesian Employer Pension Funds (EPFs) during 2011–2017 (280 firm-year observations). We use the double-bootstrap data envelopment analysis (DEA) method, as described by Simar & Wilson (2007), to analyze the data. The findings indicate that size, ownership, and pension plan type affect pension funds’ efficiency. Size positively affects operating and investment efficiency, presumably due to economies of scale. In addition, pension funds sponsored by state-owned enterprises exhibit higher operating and investment technical efficiency due to their larger size and better financial knowledge/skills. On the other hand, pension plan type negatively affects operating management but not investment efficiency. For macroeconomic factors, only the interest rate significantly and negatively affects pension funds’ investment efficiency, while GDP growth does not significantly affect pension funds’ efficiency.

Keywords: Data Envelopment Analysis; Business; Finance; Banking; Accounting; Sustainability; Efficiency; Performance; Productivity; Total Factor Productivity; Frontier Analysis (search for similar items in EconPapers)
JEL-codes: C44 C5 (search for similar items in EconPapers)
Date: 2024
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