Competition Analysis of Banking Industry in Indonesia: Bank Size, Bank Type, and Efficiency Transfers

The purpose of the research is to conduct an analysis on the level of competition of the banking industry in Indonesia. Using the data from 107 conventional banks which operates from 2005 to 2014, this research utilizes Profit Elasticity Model to measure the level of competition. The results show the decreasing of the level of competitiveness in the Indonesia Banking Industry. It also indicates that big banks are facing a lower level of competition compared to the banks that are considered medium or small. Moreover, the regional development banks are facing the lowest level of competition. In general, the result indicates there is no transfer in efficiency. The banks that are considered relatively as more efficient would choose to attempt to aim for higher profit compared to transferring the advantage in terms of efficiency to lower the interest level to broaden the market.