The Efficiency Analysis Of Commercial Banks In Indonesia Using Data Envelopment Analysis And Malmquist Index Approach

This research estimates the technical efficiency and the efficiency change in Indonesia commercial banks during the period 2011-2016.Data Envelopment Analysis and the Malmquist index have been applied on the data of 20 listed commercial banks in Indonesia Stock Exchange.BBC model has been used in thi research with input-oriented measure.The input variables in this research are total deposit,interest expenses and personnel&administrative expense.While the output variables are total loan and interest income.The result shows that in general the technical efficiency of Indonesia banking industry from 2011-2016 is inefficient with the average score every year is 92.1%,93.6%,93.8%,95.3%,93.9%and 91.8%.The highest average score based on the year observation is in 2014 and the lowest score is in 2016.The result of Malmquist Index annual means indicates that most banks have shown deterioration in efficiency change by 60%.But most banks have shown improvement in technological efficiency change by 60%.Pure technical efficiency improvement by 60%,scale efficiency change improvement by 40%and total factor productivity improvement by 40%as well.With the reference to the Malmquist summary of annual means,it is evident that the most commercial banks experienced technological progress.However the efficiency gains during the period of study was due to improvement in technological efficiency rather than technical efficiency.The result of Malmquist Index Firm means indicates that most of the commercial banks showed an imporvement in productivity change,with exceptional to pure efficiency change where the score recorded deterioration in productivity change.The efficiency change score recorded an improvement of 55%of commercial banks technological change recorded an imporvement 60%,pure efficiency change the number of commercial banks recorded improvement 20%,About 45 percent of commercial banks recorded improvement in scale efficiency.Total factor productivity change about 70 percent recorded an improvement.