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Research Paper | Economics | Indonesia | Volume 6 Issue 2, February 2017 | Popularity: 6.8 / 10

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Efficiency Analysis of Bank Branches: Production and Profitability Approaches (Case Study of Bank EFG Syariah)

Deny Syaiful Hayat, Lukytawati Anggraeni, Toni Bakhtiar

Abstract: Until 2015, market share of Indonesian Islamic banking was still below of total 5 % Indonesian banking market share. One effort to increase the market share is to spin off its Islamic business unit into Islamic commercial banks. One of the banks that undergoes the process was Bank EFG Syariah. However, Bank EFG Syariah has not been showing an optimal performance, which is indicated by reduced levels of corporate profitability in 2015. The aim of this study was to develop a performance model for measuring the relative efficiency and potential improvement capabilities of Bank EFG Syariah branches for the period 2014 and 2015. Data Envelopment Analysis (DEA) technique is utilitized here under production and profitability models. Another purpose was to investigate the production and profitability aspects of branches and to measured productivity change of Bank EFG Syariah branches between period. In this study the nature of efficiency and productivity change was investigate through the Malmquist Index. The results showed that there was an increase of 6 % in high production-high profitable branches group, a decreased of 8 % of the low production-high profitable branches group, a decreased of 7 % the high production-low profitable branches group, and an increased of 4 % in low production-low profitable branches group. This reasearch also showed the average productivity increase of branches Bank EFG Syariah, between the period 2014-2015.

Keywords: Bank branches, DEA, Efficiency, Productivity, Malmquist Index

Edition: Volume 6 Issue 2, February 2017

Pages: 2078 - 2082

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