Efficiency of Indonesian Islamic People’s Financing Banks using Data Envelopment Analysis

Naelati Tubastuvi, Azmi Fitriati

2018

Abstract

An efficient bank will be able to reduce costs and impose a relatively low margin on customers. In the long term, achieving efficiency will significantly increase the market share of Islamic banking. This study aims to measure the efficiency level of Islamic People's Financing Bank (BPRS) in Central Java Province, Indonesia. The method used in this study is Data Envelopment Analysis (DEA) to measure and map the Islamic People's Financing Bank (BPRS) efficiency level. The data used are all BPRS in Central Java during the period of 2010-2016. Data on input and output variables are obtained from the balance sheet and profit and loss statement for each BPRS. Two inputs and two outputs are used to measure the efficiency of BPRS. The input variables are Third Party Funds (X1) and Personnel Costs (X2). Meanwhile, the output variable are Total Financing (Y1) and Operating Income (Y2). The use of deposits and financing in input-output because this study uses an intermediation approach. The results of this study indicate that in general, the average efficiency level of BPRS in Central Java Province during the study period was 75.87%, BPRS that achieved optimal efficiency levels were less than those that were not efficient. Pure technical inefficiency BPRS exceeds the scale inefficiency, which means managerially incompetent are exist in the utilization of input resources even though the BPRS has been operating on a reasonably optimal scale of operation. Based on the analysis of total potential improvement, the results showed that in order to be more efficient, BPRS that are not efficient should be able to optimize the financing level of 98.16% or almost twice the current condition and reduce the operational expense by 0.91%. Similarly, third party funds (DPK) that have not been optimized amounted to 0.91%.

Paper Citation

in Harvard Style

Tubastuvi N. and Fitriati A. (2018). Efficiency of Indonesian Islamic People’s Financing Banks using Data Envelopment Analysis.In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES, ISBN 978-989-758-432-9, pages 1357-1366. DOI: 10.5220/0009503613571366

in Bibtex Style

@conference{unicees18,
author={Naelati Tubastuvi and Azmi Fitriati},
title={Efficiency of Indonesian Islamic People’s Financing Banks using Data Envelopment Analysis},
booktitle={Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES,},
year={2018},
pages={1357-1366},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0009503613571366},
isbn={978-989-758-432-9},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES,
TI - Efficiency of Indonesian Islamic People’s Financing Banks using Data Envelopment Analysis
SN - 978-989-758-432-9
AU - Tubastuvi N.
AU - Fitriati A.
PY - 2018
SP - 1357
EP - 1366
DO - 10.5220/0009503613571366