EFFICIENCY ANALYSIS OF SOME

INDONESIAN COMMERCIAL BANKS

YOGI SUGIONO

This project is submitted in partial fulfillment of

the requirement for the degree of Bachelor of Economics with Honours

(Industrial Economics)

Faculty of Economics and Business

UNIVERSITI MALAYSIA SARAWAK

2010

ABSTRACT

Efficiency Analysis of Some Indonesian Commercial Banks

By

Yogi Sugiono

The purpose of this study is to analyze the efficiency and also the

productivity of some Indonesian commercial banks for the period from 2005 to

2008. The data consists of a panel of ten banks based on the biggest in term of size

or total assets that has announced by the Central Bank of Indonesia, Bank Indonesia,

in August 2009. From most of the previous studies has been analyzed, non-

parametric approach with Data Envelopment Analysis (DEA) methodology is being

used of this study. Moreover, measuring efficiency level of this study more focused

on constant returns to scales (CRS) and variable returns to scale (VRS) techniques.

Meanwhile, measuring of productivity growth more focused on Malmquist

technique. Overall this study founded that only three of ten banks i. e. Bank Mandiri,

Bank Rakyat Indonesia (BRI), and Bank Pan Indonesia (Panin) indicates efficient

which the technological change component is the important sources of productivity

growth rather than technical efficiency change. Furthermore, by this study indicated

that most of the bigger bank in term of size (assets) has ability to obtain the higher

level efficiency and productivity growth.

ABSTRAK

ANALISA KECEKAPAN TERHADAP SEBAHAGIAN BANK KOMERSIL

DI INDONESIA

Oleh

Yogi Sugiono

Kajian ini dijalankan untuk menganalisis kecekapan dan produktiviti

daripada sebahagian bank komersil Indonesia dari tempoh 2005 hingga 2008. Data

terdiri daripada panel berdasarkan sepuluh bank terbesar dari segi saiz atau aset yang

telah diumumkan oleh Bank Sentral Indonesia iaitu Bank Indonesia pada bulan Ogos

2009. Berdasarkan kajian-kajian sebelumnya, pendekatan Non-Parametrik,

metodologi Data Envelopment Analysis (DEA) digunakan dalam kajian ini untuk

mengukur tahap kecckapan, yang mana kajian ini lchih memtiokuskan kepada teknik

constants returns to scale (CRS) dan variable returns to scale (VRS). Selain itu,

ukuran pertumbuhan produktiviti lebih difokuskan kepada teknik Mulrnyui. ct. Secara

kescluruhan, kajian im mendapati bahawa tiga daripada sepuluh hank iaitu Bank

Mandiri, Bank Rakyat Indonesia (BRI), dan Bank Pan Indonesia (Panin)

menunjukan cekap dan juga pcrubahan teknologi adalah sumber penting hagi

pertumbuhan produktiviti daripada kecekapan teknikal. Lchih-lchih lagi, hank-hank

yang mempunyai salz (total aset) Ichih bcsar mcmpunyai kcmampuan yang hesar

ppula untuk mcndapatkan tingkat kecekapan dan pertumbuhan productivity Ichih

tinggi.

ACKNOWLEDGEMENT

In the name of Allah SWT, who gives me the life, the miracle, and the light

for completing this final year project.

I would like to express my special thanks to my beloved mother, Hj. Endeng

Carkiah, for her loves and affections that had given me inspirations for my life. I

also wish to extend to my sisters, my nephews, my brothers in law and my best

friend, Irawan Krisnadipta, who always give me advices and supports in all

situations.

My greatest gratitude and million thanks to my supervisor, Dr. Khairil

Annual Mohd. Kamal, for his patience, guidance, enthusiasm and guiding me

through the completion of this final year project.

Not forgetting, my thanks go to Ms. Rosita Hamdan, Mr. Bakri Abdul Karim,

and Ms. Audrey Liwan, Mr. Dwi Sunu for sharing knowledge in doing this final year

project. Last, but not least, thanks to all my Unimas's friends, the lecturers and the

staffs of FEB, Unimas, for their graciousness and assistances.

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

CHAPTER 1: INTRODUCTION

1.1 Introduction

1.2 Background of Study

1.3 Indonesia Banking System

1.3.1 Introduction

1.3.2 History of Indonesian Banking System

1.4 Problem of Statements

1.5 Objective of Study

1.5.1 General Objective

1.5.2 Specific Objectives

1.6 Significant of Study

1.7 Scope of Study

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

2.2 Studying Bank Efficiency

2.1 Studies on Indonesian Commercial Banks Efficiency

X

xi

I

I

I

3

3

4

10

14

14

14

15

15

17

17

17

23

CHAPTER 3: METHODOLOGY 28

vi

3.1 Introduction

3.2 Research Hypothesis

3.3 Theoretical Framework

3.4 Analytical Method

3.5 Research Design

3.5.1 Data Collection

3.5.2 Data Analysis

3.5.2.1 Identification of Input and Output Variables

3.5.2.2 Data Processing

28

28

30

31

35

36

36

36

42

CHAPTER 4: EMPIRICAL RESULTS AND DISCUSSION 43

4.1 Introduction 43

4.2 Summary Statistics of Input-Output Variables 44

4.3 Empirical Results 46

4.3.1 Bank Mandiri 46

4.3.1.1 Bank Mandiri Production Frontier and Efficiency 46

4.3.1.2 Bank Mandiri Productivity Performance 46

4.3.2 Bank Rakyat Indonesia (BRI) 47

4.3.2.1 BRI Production Frontier and Efficiency 47

4.3.2.2 BRI Productivity Performance 49

4.3.3 Bank Central Asia (BC'A) 49

4.3.3.1 BCA Production Frontier and Efficiency 49

4.3.3.2 BCA Productivity Pert romance 50

4.3.4 Bank Negara Indonesia (BNI) 51

vii

4.3.4.1 BNI Production Frontier and Efficiency 51

4.3.4.2 BNI Productivity Performance 52

4.3.5 Bank CIMB-Niaga 53

4.3.5.1 Bank CIMB-Niaga Production Frontier and Efficiency 53

4.3.5.2 Bank CIMB-Niaga Productivity Performance 54

4.3.6 Bank Danamon 55

4.3.6.1 Bank Danamon Production Frontier and Efficiency 55

4.3.6.2 Bank Danamon Productivity Performance 56

4.3.7 Bank Pan Indonesia (Panin) 57

4.3.7.1 Bank Panin Production Frontier and Efficiency 58

4.3.7.2 Bank Panin Productivity Performance 58

4.3.8 Bank Permata 59

4.3.8.1 Bank Permata Production Frontier and Efficiency 59

4.3.8.2 Bank Permata Productivity Performance 60

4.3.9 Bank Internasional Indonesia (B11) 61

4.3.9.1 BII Production Frontier and Efficiency 61

4.3.9.2 BII Productivity Performance 62

4.3.10 Bank Tabungan Negara (BTN) 63

4.3.10.1 BTN Production Frontier and Efficiency 63

4.3.10.2 BTN Productivity Perfornance 64

4.4 Overall Results offen Indonesian Commercial Banks 65

4.4.1 Correlation between Input and Output Variables 65

4.4.2 Production Frontier and Efficiency 68

4.4.3 Productivity Performances 71

X1111

4.5 Implications of Results to the Hypotheses 76

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS 80

5.1 Introduction 80

5.2 Conclusion 80

5.3 Recommendation 81

5.3.1 Recommendation for Most Indonesian Commercial Banks 81

5.3.2 Recommendation for BI as the Central Bank of Indonesia 82

5.3.3 Recommendation for Future Research 82

5.4 Limitations of the Study 83

REFERENCES 84

APPENDIXES

APPENDIX A: FINANCIAL DATA OF TEN INDONESIAN COMMERCIAL

BANKS, 2005-2008

APPENDIX B: DEA RESULTS

APPENDIX C: PROFILE OF TEN INDONESIAN COMMERCIAL BANKS

IX

LIST OF FIGURES

Figure 1: Indonesia's Annual Growth of Economy Activities, 1990-2007 3

Figure 2: Recapitalization of Banking Institution in Indonesia December 2008 9

Figure 3: Theoretical Framework of Estimation Indonesian Commercial Bank Efficiency 30

Figure 4: Ten Indonesian Commercial Banks Production Frontier and Efficiency Performance Annual Means, 2005-2008 69

Figure 5: Efficiency Score of Bank Means under CRS and VRS, 2005-2008 71

Figure 6: Malmquist Index Summary of Annual Bank Means, 2005-2008 73

Figure 7: Total Factor Productivity (TFP) Means of Ten Indonesian Commercial Banks, 2005-2008 76

x

LIST OF TABLES

Table 1: Transition of the Number of Banks and Branches in Indonesia 4

Table 2: Top Ten Indonesian Commercial Banks Based on Total Assets in August 2009 12

Table 3: Outputs and Inputs Used in Various Studies 37

Table 4: Summary of Input-Output Variables of Ten Indonesian Commercial Banks, 2005-2008 45

Table 5: Technical Efficiency Scores of Bank Mandiri under CRS and VRS, 2005-2008 46

Table 6: Bank Mandiri Malmquist Index Summary, 2005-2008 46

Table 7: Technical Efficiency Scores of BRI under CRS and VRS, 2005-2008 47

Table 8: BRI Malmquist Index Summary, 2005-2008 48

Table 9: Technical Efficiency Scores of BCA under CRS and VRS, 2005-2008 49

Table 10: BCA Malmquist Index Summary, 2005-2008 50

Table 11: Technical Efficiency Scores of BNI under CRS and VRS, 2005-2008 51

Table 12: BNI Malmquist Index Summary, 2005-2008 52

Table 13: Technical Efficiency Scores of Bank CIMB-Niaga

under CRS and VRS, 2005-2008 53

Table 14: Bank CIMB-Niaga Malmquist Index Summary, 2005-2008 54

Table 15: Technical Efficiency Scores of Bank Danarnon under CRS and VRS, 2005-2008 55

Table 16: Bank Danamon Malmquist Index Summary, 2005-2008 56

Table 17: Technical Efficiency Scores of Bank Panin under CRS and VRS, 2005-2008 57

Table 18: Bank Panin Malmquist Index Summary, 2005--2008 58

xi

Table 19: Technical Efficiency Scores of Bank Permata under CRS and VRS, 2005-2008 59

Table 20: Bank Permata Malmquist Index Summary, 2005-2008 60

Table 21: Technical Efficiency Scores of 1311 under CRS and VRS, 2005-2008 61

Table 22: 1311 Malmquist Index Summary, 2005-2008 62

Table 23: Technical Efficiency Scores of BTN under CRS and VRS, 2005-2008 63

Table 24: BTN Malmquist Index Summary, 2005-2008 64

Table 25: Results of Pearson Correlation for the Variables of the Input (Interest Income) and Outputs (Interest Expenses and Operating Expenses) of Ten Commercial Banks in Indonesia, 2005-2008

Table 26: Results of Pearson Correlation for the Variables of the Input (Operating Income) and Outputs (Interest Expenses and Operating Expenses) of Ten Commercial Banks in Indonesia, 2005-2008

65

65

Table 27: Changes in the Inputs and Outputs 67

Table 28: Efficiency of Bank Annual Means under CRS and VRS, 2005-2008 69

Table 29: Efficiency Score of Bank Means under CRS and VRS, 2005-2008 70

Table 30: Malmquist Index Summary of Bank Annual Means, 2005-2008 71

Table 3 1: Malmquist Index Summary of Bank Means, 2005-2008 73

xii

CHAPTER 1

INTRODUCTION

1.1 Introduction

This chapter contains a general idea which was including the background of

this study which held the case in Indonesian commercial banks. Additionally, the

problem statement, the objectives, the significant and the scope of this study would

be discussed.

1.2 Background of Study

Over the past few years, services sector has been growing rapidly and

accounted for about 20 percent of the total international trade both developing

countries and developed countries, thus the rate of increase of the service sector is

higher than the goods sector. Meanwhile, banking industry as part of services sector

is the biggest contribution in most countries (ADB, 2008).

The Asian economy which were including developing countries have grown

tremendously because of the increment in the trade of commercial services,

construction services, computer software, data processing and tourism. Thus the role

of commercial banks is remarkably enhanced in all the countries to support the

increasing need of the service sector and the economy in general. This is because

commercial bank may mobilize deposits from the public. People who have surplus

I

income and savings find it convenient to deposit the amounts with banks. Depending

upon the nature of deposits, funds deposited with bank also earn interest.

In addition, deposits with the commercial bank grow along with the interest

earned. If the rate of interest is higher, public are motivated to deposit more funds

with the bank. There is also safety of funds deposited with the bank. Meanwhile,

banking products are typically intangible, perishable and in most cases involve

simultaneous consumption and production (Khatri, Aryal, Sapkota, 2008).

However, the estimation of bank efficiency has been a crucial issue in

transition due the countries in the world has been faced economic and financial

crisis. Besides that, analysis of efficiency in most of financial institution has been

examined by researcher since the last few decades. Basically, efficiency may

measure productivity of financial institution itself; hence it could influence their

performances. Furthermore, analysis efficiency could obtain several contributions

such as to measure profitability, greater amount of funds channeled in, to improve

better quality of services for consumer themselves, and to analyze the risk for

decision making in their future banks' life. (Berger, Huter, & Timme, 1993). Thus,

the study of efficiency of banking industry in developing country such as Indonesia

is very interesting, due to services sector as second potential Indonesian economy

activities which widely contributed by banking industry (ADB, 2008).

I

1.3 Indonesia Banking Systems

1.3.1 Introduction

Services sector is the second largest sector that contributed Indonesia's gross

domestic product (GDP) after manufacturing sector is highly affected from external

factor. In the fact, Indonesian banking industry had many various issues regarding

the efficiency and the safety of domestic banks from bankruptcy during the Asian

Financial Crisis 1997/1998. Before the crisis, services sector was increase in level

6.8 percent (1996), otherwise during the crisis was decrease slowly in level 5.6

percent in 1997 and but regress rapidly in level 14.6 percent in the year 1998 (ADB,

2008). Figure 1 represent among the percentage growth of' services' sector and

another sectors decline rapidly during the Asian Financial Crisis 1997/1998.

Figure 1: Indonesia's Annual Growth of Economy Activities, 1990 -2007

15

10

5

\° ý 0

ZO u. ß -S

Cu. 10

-15

-20 [

Source: Asian Development Bank (ADB)

--ý- Agriculture Industry

- -} - Services

-(it) I'

3

Additionally, the negative impact of Asia financial crisis 1997/1998 has

reduced Indonesian commercial banks performances rapidly. As could be seen to the

table 1 shows the differentiation of total commercial banks in Indonesia between

prior and posts Asia Financial Crisis 1997/1998 impact liquidation and consolidation

(Merger and Acquisition) by Indonesian central bank.

Table 1: Transition of the Number of Banks and Branches in Indonesia

1996 1998 2000 2001 2002 2003

State banks 7 7 5 5 5 5 Number of branches 1,379 1,602 1,506 1,807 1,885 2,072

Regional development banks 27 27 26 26 26 26 Number of branches 490 555 550 857 909 1,003

Domestic private banks 164 130 81 80 76 76 Number of branches 3,964 3,976 3,228 6,765 7,001 7,730

Foreign banks/Joint venture banks 41 44 39 34 34 31 Number of branches 86 121 95 113 114 126

Total number of banks 239 208 151 145 141 138 Number of branches 5,919 6,254 5,379 6,765 7,001 7,730

Source: * Adopted from Ilarada and Ito (2005)' ** Bank Indonesia. Annual Report 1998.2000, and 2003.

1.3.2 History of Indonesia Banking System

The Indonesian banking system has a series of long history. The Indonesian

people were first introduced to banking institutions upon the establishment of ! )e

Bank Van Leenrng by Netherlands government during colonization past century.

Foreign banks began to operate in line with the developing of the country's

economy. Peace efforts had been initiated several times, yet the Dutch government

Retrieved from Rebuilding the Indonesian Banking Sector I"conomic Analysis of Rank Consolidation and Efficiency. Japan Bunk International for Corporation OB/C7, No. 12, pp. 33.

4

kept breaching the deal. The remaining hatred in the hearts of the Indonesians

sparked the nationalism spirit for nationalizing the Dutch companies and such desire

magnified that the taking over of these Dutch companies finally took place. The

Dutch banks were of no exception.

Began the elucidation of the 1945 Constitution stipulated the foundation for

the economic development, among others by focusing on the existence of the Central

Bank. After returning to the Unitary State of the Republic of Indonesia on 17 August

1950, Indonesia was faced with a Herculean task of reuniting the two banking

structures that were previously separated. Initially, Indonesian economic structure,

including banking, was still dominated by the colonial system. Indonesian banking

structure of the time was not of any significance in administering banking

operations. This caused the public to strongly demand that more national elements be

involved in Indonesian economic structure.

Through the nationalization of Dc Javasche Bank (DJB) at the end of 1951,

the attempts to set up a Circulation Bank and Central Bank for the Republic of

Indonesia began. On 10 April 1953, the parliament endorsed Draft Principal Act on

the Central Bank which had previously been presented by the Nationalization

Committee in September 1952. The draft was enacted as Act No. II of 1953

regarding the Principal Act of the Central Bank that was effective from 1 July 1953.

This marked the birth of Bank Indonesia (BI) as the Indonesian Central Bank which

has crucial position to handle Indonesian economic activities indirectly. This view

also augmented according to Indonesian Law No. 10/1998 that defined the hank is

S

"hadan usaha yang menghimpun dana dari masvarakat dalam heniuk simpanan dan

menvalurkannva kepada masavarakat dalam hentuk kredit dan/atau hetuk-hentuk

lainnva da/am rangka meningklakan taraf hidup rakvat hanvak " means a busineness

entity which collects funds from the public in the form of deposits and channeled to

the community in the form of credit and/or another form in order to improve the

people's standard living. In the fact, this law came out from Indonesian constitution

in 1945 before amendments on the article 33 section two, "sector of production

which are important for the country and affect the /i fey of the people shall he

controlled by the state. "

Furthermore, Indonesian banking system viewed from their function

categorized as commercial banks, savings banks, development banks, and secondary

banks. In principle, the banking system in Indonesia is part of financial system that

has wide coverage namely financial institutions as intermediation institutions,

financial instruments, such as stocks, bonds, money market bonds, treasury notes,

and markets as instrument trading places such as stock exchange and inter-bank

money market. In short. financial institutions include banks, non-hank financial

institutions (development financing institutions, intermediation institutions of issuing

and trading bonds, for instance), and other kinds of financial institutions, such as

insurances, venture capitals, and leasing.

Commercial banks, among other things, serve to provide facilities of the

public's fund savings in the form of clearing accounts, savings accounts, or deposit

accounts that may be utilized by the public to meet their needs. Apart from this,

6

banks are able to create check and quasi money trough processes of multiplying the

funds generated from the public to be re-channeled to the public. Banks are also

assigned to provide fund payment or transfer mechanism that may minimize cost and

constraints, as well as to provide loans of great use in increasing production,

expanding investment.

According to Sergeant (2001), commercial banks lend in many areas or

sector of the economy. Viewed from the real sector, employment creation, and by

extension, the process of economic growth and also the crucial thing is involved

in investment from various sectors of economy activities. The commercial banks

collect savings from the people and mobilize saving for investment in industrial

project. The investors borrow from banks to finance the projects. Promote the growth

rate through the reorientation of loan policy. Special funds are provided to the

investors for the completion of projects. The banks provide a guarantee tör industrial

loan from international agencies. The foreign capital flows to developing countries

investment projects.

Besides normal banking the banks perform agency services for the client. The

banks buy and sell securities, make rent payments, receive subscription funds and

collect utility hills for the Government departments. Thus these banks save time and

energy of busy peoples. Banks arrange foreign exchange for the business transaction

with other countries. The facility of foreign account has resulted in an increase

of foreign exchange reserves. By opening a letter of credit the banks promote

foreign trade.

7

In another side, Indonesian commercial banks itself viewed by ownership are

divided three categories. First at all, state banks of which their capitals are fully

owned by the government and stand as a separate government asset such as Bank

Rakyat Indonesia (BRI) which established since 1895, Bank Tabungan Negara

(BTN) which established since 1897, Bank Negara Indonesia (BNI) which

established since 1946, Bank Bumi Daya (BBD) which established since 1959, Bank

Pembangunan Indonesia (Bapindo) which established since 1951, and etc.

Secondly, national private banks of which their capitals are owned by

Indonesian citizens or Indonesian corporations such as Bank Central Asia (BCA),

Bank Pan Indonesia (Bank Panin), Bank Penmata, Bank Danamon, Bank OC'BC

NISP, CIMB Niaga, Bank Intenasional Indonesia (BII), and etc.

Foreign Banks as the representative office of the overseas banks or the Joint

Venture Banks of which their capitals are partly owned by foreign banks and partly

by Indonesian citizens. It is worth noting that not every bank is authorized to carry

out transactions with overseas parties, except for the banks that have obtained the

license to do so. These are called Foreign Exchange Banks. However, most of bigger

international bank have representative in Indonesia such as City Bank from United

Sates of America (Bank Indonesia, 2009).

Conversely, Bank Indonesia annual report that in 2003 (could prefer to table

l) registered total of commercial banks were 138 banks, nevertheless in the end 2008

8

were 124 banks only. Meanwhile, 14 banks were disappearing due several

programmers implemented (The next section or Chapter 2, would narrated

comprehensively). For details, see the figure 2 which presented recapitalization of

banking institutions in Indonesia in the end year of 2008.

Figure 2: Recapitalization of Banking Institution in Indonesia December 2008

Commercial Banks \/ Rural Credit Banks

(124) /\ (1879)

State Banks

(5)

ý 1' Private

National Banks 0 19)

W 1' Regional

Commercial Banks (26)

Source: Bank Indonesia, 2009.

Private National

Banks (88)

Rural Credit Banks (1879)

Islamic Rural Credit Banks (I 28)

T Islamic

Commercial Banks (5)

9

Moreover, commercial banks in term of principle operations are dived two

categories; conventional bank and Islamic bank. But in the fact, the typical of

financial liberalization in conventional banks might be major interesting first towards

Indonesian people rather than Islamic bank.

These banks generally operated in parallel market to enhance economic

growth although the first Islamic bank i. e. Bank Muamalat Indonesia born in early

1990s. Thus, it was such contradictive that Indonesia most populous Muslim nation

in the world born lateness. Moreover, Islamic bank have been lower in total asset

compare to Malaysia and Turkey. Total assets Islamic bank in Indonesia (2007)

noted has only US$ 3,287 million, where Malaysia as the largest total assets in world

has US$ 34,543 million, follow Turkey US$ 12,902 million (Zaharuddin, 2007;

Wouters, 2008).

1.4 Problem Statements

The impact size of assets which have influences to the efficiency level of

commercial banks is still augmentative from most previous studies. Sathyc (2002) is

one of researcher believed that there was no correlation between size and efficiency

level. While Jakson and Fethi (2002) and most another researcher believed that there

have positive correlation the size of assets with efficiency level.

I0

In the fact, Bank Indonesia in August 2009 has announcement the top ten

biggest commercial banks in Indonesia based on their size or total assets`. The table

2 represents the top ten commercial banks with their total assets. Three of bank i. e.

Bank Mandiri, BRI, and BNI that included the ten biggest commercial banks in

Indonesia are Government-owned where one of these banks is regulated by merger

i. e. Bank Mandiri. Moreover, six banks i. e. BCA, CIMB-Niaga, Bank Danamon,

Bank Panin, Bank Permata, and 1311 are private-owned where five of them CIMB-

Niaga, Bank Danamon, Bank Panin, and Bank Permata, BII are regulated by merger.

Even though Bank Mandiri is one merger bank since Asian financial crisis,

their ability could obtain as the largest size by total assets since 2005. Generally, the

banks were increasing their total assets significantly except Bank Danamon and

Citibank from 2008. This was recorded by Bank Indonesia regarding top ten

commercial banks based on total assets in December 2008 i. e. BRl on the second

position was increased 7.4 percent from previous year with IDR 250,134 trillion,

follow BCA on the third position was increased 7.9 percent from IDR 246.702

trillion. Then, on the fourth position BNI was increased 1.6 percent from IDR

200.974 trillion.

2 The announcement was published on Kompas media online on 13'x' October 2009. Kompas is the

most widely read newspaper in Indonesia since 1965. I his is the subsidiary company of (iremedia

group.

11

Table 2: Top Ten Indonesia Commercial Banks Based on Total Assets in August 2009

Total Assets (in Rank Name of Bank Trillion Rupiah)

I PT. Bank Mandiri Tbk. 346.124

2 PT. Bank Rakyat Indonesia (BRI) Tbk. 268.700

3 PT. Bank Central Asia (BCA) Tbk. 266.202

4 PT. Bank Negara Indonesia (BNI) Tbk. 204.364

5 PT. CIMB Niaga Tbk. 100.496

6 PT. Bank Danamon Indonesia Tbk. 97.161

7 PT. Pan Indonesia (Panin) Bank Tbk. 69.671

8 PT. Bank Permata Tbk. 54.381

9 PT. Bank lternasional Indonesia (BI1) Tbk. 54.291

10 Citibank NA 53.055

Source: Kompas (2009) '

Likewise, Bank CIMB-Niaga was replaced position from Bank Dananum

nowadays. Bank CIMB Niaga was increased rapidly in level 45 percent from IDR

69.305 trillion due merging implemented with CIMB Bank from Malaysia since

2006. Then, the sixth position, Bank Danamon was decreased in level 7.32 percent

from IDR 63.628 trillion. Therefore, the seventh position, Bank Panin was increased

9.5 percent from IDR 63.628 trillion. On the eight positions, Bank Permata was

increased 0.29 percent from IDR 54.220 trillion, follow Bll was increased 0.41

percent from IDR 54.068 trillion on ninth position. However, Citibank although was

Article retrieved from Imp: bisniskeuangan. kompas. com read xml 2009 10 13 14250554 Im. 1)ia. 10. l3ank. I erhesar. di. lnd

onesia

12

decreased 0.83 percent from IDR 53.503 is still maintained on tenth position.

Citibank was the only one commercial foreign bank including of top ten of

commercial banks in Indonesia history.

On the contrary, Bank Mandiri was still less efficient since established (1998)

in the early operational. This fact was examined by pervious researcher such as

Samosir (2003) and Viverita (2008). Samosir (2003) founded that Bank Mandiri

since established in 1998 until 2002 was less efficient compare to other non-merger

Government-owned banks such as BNI, BRI and Bank Ekspor Indonesia (BEI).

Moreover, Vivirita (2008) investigated the effect of merger on Bank perfirrmance

towards Bank Mandiri, Bank Danamon, and Bank Permata which she founded that

Bank Mandiri as the biggest size compared to another banks during the time was

obtained the lowest productivity growth and efficiency level compared another two

banks. Therefore, the contradiction among size of total assets and efficiency level

and productivity growth of Indonesian commercial is still curiosity regarding Bank

Mandiri as the largest commercial bank today (2009). Thus, would the big size of

total assets of some Indonesian commercial banks guaranteed to obtain higher

efficiency level and productive as well'? Meanwhile, to examine efficiency and

productivity growth of Indonesian commercial batiks would he very interesting

considering with their historical especially during Asia Financial Crisis 1997/1998

such merger programme, liquidity support, etc by Bank Indonesia.

13