TITLE:
Competitiveness and Bank Stability: Empirical Study on Banking Listed on the Indonesia Stock Exchange Period 2011-2020
AUTHORS:
Wiyarni Wiyarni, Yusrian Ashar, Tutik Arniati
KEYWORDS:
Degree of Competitiveness, Bank Size, Revenue Concentration, Bank Stability
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.12 No.6,
June
16,
2022
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.