Analysis of Indonesia Banking Structure

The growing number of banks in Indonesia is increasing along with the globalization that causes the level of competition in the banking industry is getting tighter. Fierce competition requires banks to improve their performance in a healthy and solid. Banking health alone is not enough to define in detail the state of the bank, so an approach is needed through the industrial organization model using structural, behavioral, and performance instruments. This study will be more detailed in discussing the banking structure by using a sample of 78 banks in Indonesia processed through panel data from 2008 to 2015. The result is that the Indonesian banking competition is in the oligopoly area which is currently controlled by two large institutions namely Bank Indonesia and the Service Authority Finance.