The Impact of Competition on Indonesian Commercial Banks before and after Global Financial Crisis

This study provides analysis of the competition in the Indonesian banking industry of publicly-listed Indonesia banks before and after financial global crisis. Applying a balanced panel data, this study also identify the effect of competition in banking industry on the efficiency of banking industry, modeled by net interest margin (NIM). The competitive conduct of the banking industry is estimated by applying the Panzar-Rosse statistics. In addition, this study examined the impact of bank-specific factors and macroeconomics variables on efficiency (NIM). The results show that in general, the banking industry consistently remains at monopolistic condition during the observation period. The study also found that there is a positive relationship between competition and NIM before crisis period, but turned out into negative after the crisis began. Furthermore, the global financial crisis in fact decreased the level of NIM of the banking industry