Determinants of bank efficiency in asean5: Size as a control variable

Abstract

Purpose - The purpose of this study was to analyze the effect of Bank Age, Loan to Assets Ratio (LAR), Net Interest Margin (NIM), and non-interest margin (Non NIM) on bank efficiency, especially in ASEAN-5 countries (Indonesia, Singapore, Thailand, Malaysia and Philippines). In this research, bank size was used as a control variable. Design/methodology/approach -The sample of the research was taken form generalbanking entities listed in each country over the period of 2014-2018. Purposive sampling method was used to select 58 banks as the sample population. We use two-stage methodology in this research by using Data Envelopment Analysis (DEA) to calculate bank efficiency and Multiple Regression Analysis (MRA). Findings- The result showed that capitalization and bank age had a negative significant effect on bank efficiency, while the variable of Loan to Asset Ratio (LAR), Net Interest Margin (NIM) and No-NIM had a positive significant effect on bank efficiency. Originality/value - The measurement of bank efficiency was conducted by utilizing DEA in this study to examine the bank efficiency in ASEAN 5.