• Rudi Purwono Airlangga University
  • Mohammad Zeqi Yasin Coordinating Ministry for Economic Affairs
Keywords: Global Crisis, Convergence, Inefficiency, Banking


This paper analyzes the inefficiency convergence of Indonesian banks using Stochastic
Frontier Analysis and panel data estimation, covering the period after financial crisis
2008 until 2017. This paper also investigates the determinant of this inefficiency
implying the convergence. To estimate the inefficiency rate, proxied by price of
loan, this paper uses three inputs including price of labor, price capital, and price of
fund. Our analysis shows that during 2008-2017 the inefficiency score converged at
a speed of 26.2 %. Furthermore inflation, gross domestic product, and exchange rate
significantly affect the growth of inefficiency convergence. This paper contributes to
the empirical literatures particularly on banking research. Overall, the findings imply
that policymakers can mitigate the effects of the global financial crisis by lowering
interest rate, providing fiscal stimulus, as well as protecting the poorest from financial


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Author Biographies

Rudi Purwono, Airlangga University

Department of Economics, Faculty of Economics and Business

Mohammad Zeqi Yasin, Coordinating Ministry for Economic Affairs

Researcher of Coordinating Ministry for Economic Affairs


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How to Cite
Purwono, R., & Yasin, M. (2018). THE CONVERGENCE TEST OF INDONESIA BANKING INEFFICIENCY: DO MACROECONOMIC INDICATORS MATTER?. Buletin Ekonomi Moneter Dan Perbankan, 21(1), 123-137.