• 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 StochasticFrontier Analysis and panel data estimation, covering the period after financial crisis2008 until 2017. This paper also investigates the determinant of this inefficiencyimplying the convergence. To estimate the inefficiency rate, proxied by price ofloan, this paper uses three inputs including price of labor, price capital, and price offund. Our analysis shows that during 2008-2017 the inefficiency score converged ata speed of 26.2 %. Furthermore inflation, gross domestic product, and exchange ratesignificantly affect the growth of inefficiency convergence. This paper contributes tothe empirical literatures particularly on banking research. Overall, the findings implythat policymakers can mitigate the effects of the global financial crisis by loweringinterest rate, providing fiscal stimulus, as well as protecting the poorest from financialdeterioration.

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.