MARKET STRUCTURE AND MACROECONOMIC ON INDUSTRY PERFORMANCE OF RURAL BANKS IN SOUTHEAST SULAWESI PROVINCE OF INDONESIA

Abstract

This study aimed to examine the effect of macro-economy and market structure of the industry's performance of rural banks (BPR) in Southeast Sulawesi province using data quarter of the year 2011 to 2013, total population of 12 rural banks in Southeast Sulawesi. The data were analyzed using panel data by combining a cross-sectional data and time series. The theory used in this study is the Structure-Conduct-Performance (SCP) that proxy to Market concentration (MC) and Relative Efficiency (RE) which proxy to Market Share Deposits (MSD). The study found that (Market Concentration) lowered the performance of (BPR bank industry) and increasing Market Share Deposits improved the performance of BPR bank industry. Furthermore, large (MSD) and greater capital adequacy ratio (CAR), as well as Log to total assets (LTA) and the size of banks improved the performance of BPR bank industry. On the contrary, the market concentration, increasing liabilities to total assets (LTTA), growing non-Performing Loan (NPL) lowered the performance of BPR bank industry in Southeast Sulawesi. Furthermore, the level of LDR and (PIFL) was not able to improve the performance of BPR industry in Southeast Sulawesi Province. This indicates that many (BPR) banks operating during the study period were not efficient in the provision of loans in other words the majority of BPR banks operating in Southeast Sulawesi province were still in a loss position.

Keywords

• structure conduct performance
• relative efficiency theory
• macroeconomic performance industrial rural bank
• panel data analysis