Regional banks and market power: evidence from Indonesia. (2018)

• Record Type: Journal Article
• Authors: Trinugroho, Irwan; Damayanti, Sylviana Maya; Wiryono, Sudarso Kaderi; Nugroho, Linggar Ikhsan
• Is Part Of: International journal of monetary economics and finance. Volume 11:Number 2(2018)
• Page Start: 126
• Page End: 139
• Publication Date: 2018
• Subjects: regional banks -- market power -- Indonesia -- institutional development -- socio-economic development; Monetary policy -- Periodicals; Finance -- Periodicals; Economics -- Mathematical models -- Periodicals; 332.4
• Languages: English
• ISSNs: 1752-0479

Abstract

This paper investigates market power difference between regional banks and other banks in the context of Indonesia over the period of 2001-2009 resulting in 641 observations. Further, we also examine the determinants of market power of regional banks by considering local institutional development. According to the univariate and multivariate tests, we do find that Indonesian regional banks have a larger market power than other commercial banks. However, contrary to our expectation, in the regions with poor governance, market power of those banks is lower than that of well-governed regions. Similarly, socio-economic development is positively linked to the market power of regional banks.