Measuring the efficiency of government-owned banks during the COVID-19 pandemic in the emerging economy

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Abstract

This study aims to examine the technical efficiency of Indonesian government-owned banks, especially evaluating their performance during the COVID-19 pandemic. We used quarterly data ranging from the year 2019 to 2022 and a non-parametric approach known as a data envelopment analysis (DEA), and Tobit regression. Our findings show that Bank Rakyat Indonesia (BRI) and Bank Tabungan Nasional (BTN) are the most efficient and stable banks during the observation periods. In addition, the average efficiency trend shows a sharp decreasing trend in all banks from Q2 2020, the period when the COVID-19 pandemic began to spread in Indonesia. Furthermore, the Tobit regression result found that financial ratios — capital adequacy ratio (CAR), loan-to-deposit ratio (LDR), and return on assets (ROA) — have a significant positive impact to affect the efficiency level of the government-owned bank, whereas the bank’s size was found insignificant (Susamto et al., 2023; Ikhwan & Riani, 2022). The paper contributes to the body of knowledge by specifically focusing on measuring the relative efficiency of government-owned banks in Indonesia in the most recent period in addition to existing, which represents the period before and during the pandemic crisis, which would fill the gaps in the available literature.

Keywords: Efficiency, Government-Owned Banks, DEA, Tobit Regression

Authors’ individual contributions: Conceptualization — I.I., M.A.M.T.T., and H.M.T.T.; Methodology — I.I., M.A.M.T.T., and H.M.T.T.; Formal Analysis — I.I., M.A.M.T.T., and H.M.T.T.; Writing — Original Draft — I.I., M.A.M.T.T., and H.M.T.T.; Supervision — M.A.M.T.T. and H.M.T.T.; Project Administration — M.A.M.T.T. and H.M.T.T.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G20, G21, C29

Received: 24.07.2023
Accepted: 27.12.2023
Published online: 29.12.2023

How to cite this paper: Ikhwan, I., Thaker, M. A. M. T., & Thaker, H. M. T. (2023). Measuring the efficiency of government-owned banks during the COVID-19 pandemic in the emerging economy. Corporate Board: Role, Duties and Composition, 19(3), 15–26. https://doi.org/10.22495/cbv19i3art2