Efficiency and competition in banking industry: Case for ASEAN-5 countries

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Ulik Hertina Wuni Astuti, Putu Mahardika Adi Saputra

2019 Scientific Annals of Economics and Business Vol. 66 Issue 2 Article Cited by 5 SDG 8 Quartile

Abstract

This paper analyzes the level of the efficiency and competition (market structure) of ASEAN-5 banking industry from 2005 until 2016. Two methods were employed, i.e. Stochastic Frontier Analysis and Adjusted Lerner Index. The former is utilized to measure the bank efficiency in ASEAN-5 countries and the latter is applied to measure the bank competition (market structure) in ASEAN-5 banking industry. In order to connect the efficiency and competition level of ASEAN-5 banking industry, this study also utilizes quadrant analysis based on three different periods, namely the period before the global crisis (2005-2008), the period after global crisis (2009-2015), and the period after the establishment of ASEAN Economic Community -AEC- (2016). The results reveal that on average, the efficiency and the competition level of banks in ASEAN-5 countries are found to be relatively high. The competition in ASEAN-5 banking industry could be classified as monopolistic where each bank competes by diversifying their products or segments. © 2019 Alexandru Ioan Cuza University of Iasi.

Affiliations

Department of Economics, Faculty of Economics and Business, University of Brawijaya, Indonesia

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