Structure of Commercial Banks in Indonesia During the Covid-19 Pandemic
Abstract
This study aims to determine the market structure of commercial banks in Indonesia. The data is sourced from commercial banks listed on the Indonesia Stock Exchange in 2018-2021. The method of analysis is descriptive using the Concentration Ratio (CR), the Herfindahl Hirschman Index (HHI), and the Minimum Efficient Scale (MES). The results show that the profitability of CR 4 commercial banks in Indonesia in 2018-2021 is in the loose oligopoly category because it has an average of 0.5357. The Hirschman Herfindahl market share profitability index is also included in the oligopoly market structure because it has an average value of 0.1157. Barriers to entry to the banking industry market in Indonesia are still relatively high because it has a Minimum Efficient Scale value of 0.1770. In this condition, the actions taken by commercial banks often have to anticipate the actions of their closest competitors, resulting in interdependence and influence between a commercial bank and other competitors, which makes collusion between producers very likely to occur. However, the COVID-19 pandemic can in fact result in a weakening of market concentration and market barriers, which will have an impact on reducing the profitability of commercial banks. For this reason, the banking industry so that its profitability does not decrease, it is necessary to carry out various strategies using various alternatives in order to obtain additional income from the services provided which are carried out efficiently using digital technology.
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About this article
Publication Date
29 November 2023
Article Doi
eBook ISBN
978-1-80296-131-7
Publisher
European Publisher
Volume
132
Print ISBN (optional)
-
Edition Number
1st Edition
Pages
1-816
Subjects
Accounting and finance, business and management, communication, law and governance
Cite this article as:
., S., & Ratnawati, N. (2023). Structure of Commercial Banks in Indonesia During the Covid-19 Pandemic. In N. M. Suki, A. R. Mazlan, R. Azmi, N. A. Abdul Rahman, Z. Adnan, N. Hanafi, & R. Truell (Eds.), Strengthening Governance, Enhancing Integrity and Navigating Communication for Future Resilient Growth, vol 132. European Proceedings of Social and Behavioural Sciences (pp. 101-110). European Publisher. https://doi.org/10.15405/epsbs.2023.11.02.8