Competitiveness and Bank Stability: Empirical Study on Banking Listed on the Indonesia Stock Exchange Period 2011-2020 ()
ABSTRACT
Banking is an institution that maintains financial system stability, but
on the other hand, banking is a business institution that is inherently risky
in getting a return on its business. This paper analyzes the impact of degree
of competitiveness, bank size, and revenue concentration on bank stability on
the Indonesian stock exchange during the period 2011-2020. The Lerner Index is
used as an inverse proxy for degree of competitiveness, the natural logarithm
is used as a proxy for bank size, and the Herfindahl Hirschman Index is used as
a proxy for revenue concentration, while the Z-Index and NPL ratio are used as proxies for bank stability. The
results show that degree of competitiveness has a negative relationship with
stability. The power squared of the Lerner Index is also used to capture the
possible non-linear relationship between degree of competitiveness and
stability and shows positive results indicating the relationship between degree
of competitiveness, and stability is non-linear. Bank size has a negative effect on
stability. Revenue concentration shows no relationship with stability.
Share and Cite:
Wiyarni, W. , Ashar, Y. and Arniati, T. (2022) Competitiveness and Bank Stability: Empirical Study on Banking Listed on the Indonesia Stock Exchange Period 2011-2020.
American Journal of Industrial and Business Management,
12, 1088-1104. doi:
10.4236/ajibm.2022.126058.
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