Efficiency of Islamic Rural Banks (BPRS) in East Java Province, Indonesia
DOI:
https://doi.org/10.30993/tifbr.v11i1.103Kata Kunci:
Islamic rural bank (BPRS), Stochastic Frontier Analysis, Technical EfficiencyAbstrak
Abstract. This study aims to measure technical efficiency and identify factors that affect technical inefficiency of Islamic rural banks (BPRS) in East Java Province, Indonesia. We also want to test whether BPRS operating in districts are more efficient than those operating in cities. Data that we use are unbalanced panel data from 2011 until 2016 using stochastic frontier analysis. This study has successfully identified that the technical efficiency of BPRS operation is 90.12 percent. It means that there is still about 9.88 percent that can be optimized to improve their performance. Factors that cause technical inefficiency are Capital Adequacy Ratio (CAR) and Net Performing Financing (NPF). To improve technical efficiency of BPRS operations, the effort that must be made is to ensure each BPRS has sufficient capital stock to be channeled into loans. In addition, BPRS should also ensure the risks of bad loans are minimum.
Referensi
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Bhattacharyya, Aditi, and Sudeshna Pal. (2013). Financial Reforms and Technical Efficiency in Indian Commercial Banking: A Generalized Stochastic Frontier Analysis. Review of Financial Economics, Vol, 22: 109-117.
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Farell, Michael J. (1957). The Measurement of Productive Efficiency, Journal of the Royal Statistical Society, Vol. 120: 253-290.
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Hasan et al. (2012). A Cobb-Douglas Stochastic Frontier Model on Measuring Domestic Bank Efficiency in Malaysia. Plos One, Vol. 7: 1-5.
Hosen, Muhamad N., Syafaat Muharri. (2013). Efficiency of he Sharia Rural Bank in Indonesia Lead to Modified Camel. International Journal of Academic Researh in Economics and Management Sciences, Vol. 2: 34-53.
Kumbhakar, Subal C., and C. A. Knox Lovell. (2000). Stochastic Frontier Analysis. Cambridge University Press.
Lind, D. A., W. G. Marchal., and S. A. Wathen. (2012). Statistical Techniques in Business and Economics 15th Edition. New York: McGraw Hill.
Meeusen, Wim., and Julien van den Broeck. (1977). Efficiency Estimation from Cobb-Douglas Production Function with Composed Error. International Economic Review, Vol. 18: 435-444.
Ngan, Le T. T. (2014). Profit and Cost Efficiency Analysis in Banking Sector: A Case of Stochastic Frontier Approach for Vietnam. Journal of Knowledge Management, Economics and Information Technology, Vol. 4: 1-17.
OJK. (2017). Laporan Keuangan Perbankan. Retrieved from: http://www.ojk.go.id/kanal/perbankan/data-dan-statistik/laporan-keuangan-perbankan/Default.aspx
Sadono, Endiarjati D. (2015). Penerapan Fungsi Produksi Cobb-Douglas dalam Menganalisis Technical Efficiency Petani Bawang Merah di Desa Buahan, Kecamatan Kintamani, Kabupaten Bangli Pada Musim Panen 2015. Bachelor Thesis. Faculty of Economics and Business Universitas Gadjah Mada.
Sadono, Endiarjati D., and Haydar H. Fatahillah. (2016). Stochastic Frontier Approach untuk Menganalisis Technical Efficiency Bank Pembiayaan Rakyat Sharia (BPRS) di Provinsi Daerah Istimewa Yogyakarta, 2011-2016. Proceedings of Forum Riset Ekonomi dan Keuangan Sharia, September 6-8, 2016, Mataram University, Nusa Tenggara Barat.
Sadono, Endiarjati D. (2017). Stochastic Frontier Approach untuk Menganalisis Technical Efficiency Pemerintah Daerah Kabupaten/Kota di Indonesia 2015. Thesis. Magister Ekonomika Pembangunan Faculty of Economics and Business Universitas Gadjah Mada.
Schmidt, P., and C. A. K. Lovell. (1979). Estimating Technical and Allocative Inefficiency Relative to Stochastic Production and Cost Frontiers. Journal of Econometrics, Vol. 9: 343-366.
Tahir, Izah M., and Sudin Haron. (2008). Technical Efficiency of the Malaysian Commercial Banks: A Stochastic Frontier Approach. Banks and Bank Systems, Vol. 3: 65-72.
Zuhroh, Idah et al. (2015). Cost Efficiency of Islamic Banks in Indonesia - A Stochastic Frontier Analysis. Procedia - Social and Behavioral Science, Vol. 211: 1122-1131.
Battese, George E. (1992). Frontier Production Functions and Technical Efficiency: A Survey of Empirical Applications in Agricultural Economics. Agricultural Economic, Vol. 7: 185-208.
Bhattacharyya, Aditi, and Sudeshna Pal. (2013). Financial Reforms and Technical Efficiency in Indian Commercial Banking: A Generalized Stochastic Frontier Analysis. Review of Financial Economics, Vol, 22: 109-117.
BPS. (2016). Tinjauan Regional Berdasarkan PDRB Kabupaten/Kota 2011-2015, Buku 5: Pulau Nusa Tenggara, Maluku dan Papua. Jakarta: Badan Pusat Statistik.
BPS. (2017). Jawa Timur Province in Figures 2016. Surabaya: Badan Pusat Statistik Provinsi Jawa Timur.
Charnes, A., W. W. Cooper, and E. Rhodes. (1978). Measuring the Efficiency of Decision Making Units. European Journal of Operational Research, Vol. 2: 429-444.
Farell, Michael J. (1957). The Measurement of Productive Efficiency, Journal of the Royal Statistical Society, Vol. 120: 253-290.
Firdaus, M. F., and M. N. Hosen. (2013). Efficiency of Islamic Banks Using Two-Stage Approach of Data Envelopment Analysis. Bulletin of Monetary, Economics and Banking: 155-176.
Fries, Steven., and Anita Taci. (2005). Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries. Journal of Banking and Finance, Vol. 29: 55-81.
Gujarati, Damodar N., and Dawn C. Porter. (2009). Basic Econometrics Fifth Edition. New York: McGraw-Hill.
Hasan et al. (2012). A Cobb-Douglas Stochastic Frontier Model on Measuring Domestic Bank Efficiency in Malaysia. Plos One, Vol. 7: 1-5.
Hosen, Muhamad N., Syafaat Muharri. (2013). Efficiency of he Sharia Rural Bank in Indonesia Lead to Modified Camel. International Journal of Academic Researh in Economics and Management Sciences, Vol. 2: 34-53.
Kumbhakar, Subal C., and C. A. Knox Lovell. (2000). Stochastic Frontier Analysis. Cambridge University Press.
Lind, D. A., W. G. Marchal., and S. A. Wathen. (2012). Statistical Techniques in Business and Economics 15th Edition. New York: McGraw Hill.
Meeusen, Wim., and Julien van den Broeck. (1977). Efficiency Estimation from Cobb-Douglas Production Function with Composed Error. International Economic Review, Vol. 18: 435-444.
Ngan, Le T. T. (2014). Profit and Cost Efficiency Analysis in Banking Sector: A Case of Stochastic Frontier Approach for Vietnam. Journal of Knowledge Management, Economics and Information Technology, Vol. 4: 1-17.
OJK. (2017). Laporan Keuangan Perbankan. Retrieved from: http://www.ojk.go.id/kanal/perbankan/data-dan-statistik/laporan-keuangan-perbankan/Default.aspx
Sadono, Endiarjati D. (2015). Penerapan Fungsi Produksi Cobb-Douglas dalam Menganalisis Technical Efficiency Petani Bawang Merah di Desa Buahan, Kecamatan Kintamani, Kabupaten Bangli Pada Musim Panen 2015. Bachelor Thesis. Faculty of Economics and Business Universitas Gadjah Mada.
Sadono, Endiarjati D., and Haydar H. Fatahillah. (2016). Stochastic Frontier Approach untuk Menganalisis Technical Efficiency Bank Pembiayaan Rakyat Sharia (BPRS) di Provinsi Daerah Istimewa Yogyakarta, 2011-2016. Proceedings of Forum Riset Ekonomi dan Keuangan Sharia, September 6-8, 2016, Mataram University, Nusa Tenggara Barat.
Sadono, Endiarjati D. (2017). Stochastic Frontier Approach untuk Menganalisis Technical Efficiency Pemerintah Daerah Kabupaten/Kota di Indonesia 2015. Thesis. Magister Ekonomika Pembangunan Faculty of Economics and Business Universitas Gadjah Mada.
Schmidt, P., and C. A. K. Lovell. (1979). Estimating Technical and Allocative Inefficiency Relative to Stochastic Production and Cost Frontiers. Journal of Econometrics, Vol. 9: 343-366.
Tahir, Izah M., and Sudin Haron. (2008). Technical Efficiency of the Malaysian Commercial Banks: A Stochastic Frontier Approach. Banks and Bank Systems, Vol. 3: 65-72.
Zuhroh, Idah et al. (2015). Cost Efficiency of Islamic Banks in Indonesia - A Stochastic Frontier Analysis. Procedia - Social and Behavioral Science, Vol. 211: 1122-1131.
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2018-03-31
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Sadono, E. D. (2018). Efficiency of Islamic Rural Banks (BPRS) in East Java Province, Indonesia. Tazkia Islamic Finance and Business Review, 11(1). https://doi.org/10.30993/tifbr.v11i1.103
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