Technical Efficiency in Indonesian Conventional Bank

Abstract

This study aims to estimates technical efficiency of large, medium-sized and small banks in Indonesia between from 2005 to 2014. This study employ Data Envelopment Analysis (DEA) technique to measure banks’ efficiency with intermediation approach to define input and output variables. The results show that large banks are the most efficient group in terms of technical, allocative, and cost efficiency compared to banks with smaller sizes. This indicates that economies of scale has substantial role in improving banks efficiency.