Analysis of Islamic Banking Market Structure in Indonesia with Panzar-Rosse Model Approach

Kiki Hardiansyah Siregar, Ahmad Qarib, Dede Ruslan

Abstract


The purpose in this study is to determine and analyze the market structure of the Islamic banking industry in Indonesia according to the Panzar-Rosse model and the level of competition between Islamic banking industry in Indonesia. To find out the market structure of the islamic banking industry it must be analyzed the effect of EAR, NPF, BOPO, FAR, FS, PL, PFF, PCE on the performance of Islamic banking as measured by ROA. The data used to answer and achieve these objectives is used secondary data from Islamic banks in Indonesia which has the largest asset ratings for a period of 6 years using the selected panel data method on the basis of Tests. The analysis model related to market structure uses the Panzar-Rosse model by looking for the H-statistic value and identified the Islamic banking equilibrium test on the panel data model of the performance of bank  in Indonesia. This study found that the performance of Islamic banking measured by ROA simultaneously affected EAR, NPF, BOPO, FAR and FS and Panzar-Rosse approach will produce H-Stat value which is the sum of three main coefficients ofbanking inputs (labor, capital and funds). With H-Stat valued at 0.735 can be concludedthat the islamic banking industry in indonesia into the category of monopolistic market.The levels of the Islamic banking industry of Bank BNI, Bank BRI, Bank Panin and Bank Bukopin are monopolistic market while Bank Muamalat and Bank Mandiri are directed towards a joint monopoly market in the position of long-term equilibrium.


Keywords


islamic banking industry; Panzar-Rosse test, h-stat; monopolistic market

Full Text:

PDF

References


Aktan, Bora & Masood, Omar. (2010). The State of Competition of the Turkish Banking Industry: An Application of the Panzar-Rosse Model. Journal of Business Economics and Management 11 (1): 131-145.

Anonimous (2016). Laporan Pengawasan Perbankan Tahun 2016. Bank Indonesia,Jakarta.http://www.bi.go.id.

Bikker, J.A. & Groneveld, J.M. (2000). Competition and Concentration in the EU Banking Industry.Kredit un Kapital, Volume 33: 62-98.

Bikker, J.A., &Haaf, K.(2002). Measurement of Competition and Concentration in Banking Industry: A Review of the Literature.Economics & Financial Modeling, Volume 9.

Bikker, J.A. Spierdijk, L & Finnie, P. (2006). Misspecification of the Panzar-Rosse Model: Assessing Competition in the Banking Industry. DNB Working Paper No.114.

Calem, P.S. & Carlino, G.A. (1991). The Concentration/Conduct Relationship in Bank Deposit Markets. The Review of Economics and Statistics, 73(2): 268-276.

Claessens, Stijn & Laeven, Luc. (2004). What Drive Bank Competition? Some International Evidence. World Bank Policy Research: Working Paper 3113.

De bandt, O. & Davis, P. (2000). Competition, Contestabality, and Market Structure in European Banking Sectors on the Eve of EMU. Journal of Banking Finance 24: 1045-1066.

Deltuvaite, Vilma. (2010). The Concentration-Stability Relationship in Banking System: an Empirical Research. Ekonomika IR Vadyba, 15.

Gilbert, A. (1984). Studies of Bank Market Structure and Competition: Review and Evaluation.

Goldberg, L.G. & Rai, A. (1996). The Structure-Performance Relationship for Europian Banking. Journal of Banking anf Finance, 20 (4): 754-771.

Hannan, T.H. (1991). Foundation of the Structure-Conduct-Performance Paradigmaz in Banking. Journal if Monry, Credit and Banking, vol 23, issue 1: 68-84.

Hannan, T.H., and A. Berger. (1998). The Rigidity of Prices: Evidence from Banking Industry. American Economic Review, Volume 81.

Hannan, T.H, and Liang, J.N. (1993). Inferring Market Power from Time-Series Data. The Case of Banking Firm, in International Journal of Industrial Organization. Volume 11 issue 2, pages 205-2018.http://doi.org/10.1016/0167-7187(93)90004-V.

Hempell, H. (2002). Testing for Competition Among German Banks Discussion Paper 04/02, Economics Research Centre of the Deutsche Bundesbank.

Matutes, C., Vives, X. (2000). Imperfect Competition, Risk Taking, and Regulation in Banking.European Economic Review 44, Volume 1.

Mkrtchyan, A. (2005). The Evolution of Competition in Banking in a Transsition Economy: an Application of the Panzar-Rosse Model to Armenia. European Journal of Comparative Economics 2(1): 67-82.

Molyneux, P., Lloyd-Williams, D.M., Thornton, J. (1994). Competition Condition in European Banking. Journal of Banking and Finance,Volume 18.

Panzar, J.C., & Rosse, J.N. (1987). Testing For “Monopoly” Equilibrium. Journal of Industrial Economics,Volume 35: 443-456.

Punt, L.W. & Van Rooij, M.C.J. (1999). The Profit-Structure Relationship, Efficiency and Mergers in the European Banking industry: an Empirical Asessment. Research Memorandum WO&E no. 604.

Setyowati, Rini. (2004). Tingkat Persaingan Industri Perbankan di Indonesia tahun 1991-2002. (Unpublished Master's Thesis). University of Indonesia.

Shaffer, S., 2004. A Test of Competition in Canadian Banking. Journal of Money, Credit and Banking, Volume 25.

Yu Sun, Julliana. (2011). Recent Developments in European Bank Competition. International Monetary Fund Working Paper, WP/11/146.




DOI: https://doi.org/10.33258/birci.v2i2.243

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.