DID THE CRISIS STRENGTHEN BANK COMPETITION IN INDONESIA?: MARKET STRUCTURE ANALYSIS PRE AND POST THE 2008 FINANCIAL CRISIS

Khoirunurrofik Khoirunurrofik, Mohammad Alvin Prabowosunu, Mohammad Ikhsan Fansuri

= http://dx.doi.org/10.20473/jde.v5i2.19660

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Abstract


The banking industry has become a substantial part of the economy. This paper traces the change in market structure and assess the level of competition among the top 10 banks of Indonesia for the period 2005-2014. Then also distinguishing between before and after the Global Financial Crisis. Utilizing the Panzar-Rosse method and panel data, we discovered that the results show an increase in the H-value from 2005-2009 to 2010-2014 and a movement towards an almost perfectly competitive environment. Interest rates drove the short response of post-crisis on the competition. Therefore governmental supervision is required to prevent liquidity issues due to the imposition of high-interest rates.

 

Keywords: Banking, Competition, Global Financial Crisis, Panzar-Rosse Model

JEL Classification: D40, D41, G21, L11


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References


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