Dede Djuniardi, Lecturer at the Faculty of Economics, University of Kuningan, earned a doctoral degree from the Faculty of Economics and Business (FEB) UGM. He obtained his degree following his open virtual defense on the dissertation entitled Efficiency, Competition, Pricing Behavior, and Information Technology in Banking in ASEAN, Tuesday (29/12).
Dede said ASEAN is a dynamic region that ignites his interest in investigating the relationship between its competition and financial stability. ASEAN underwent liberalization through foreign bank penetration in the early 1990s. Later on, it went through deregulation, regional economic integration, and extraordinary consolidation in the late 1990s as bank restructuring strategies following the 1997-1998 Asian financial crisis.
Several previous studies suggested that efficiency, competition, and bank pricing behavior showed an interdependent relationship pattern in each variable. Thus, he conducted further research to test the interdependence of the three variables using a sample of banks in six ASEAN countries. Besides, he also assessed the impact of information technology on these three variables.
“Results show there is a positive interdependence between efficiency and competition,” he explained.
As seen from the low BOPO score, high efficiency will bring about a low Lerner index score for the banks, indicating the banks are competitive.
The research also shows competition and pricing behavior are interdependent, but not between efficiency and pricing behavior. Besides, information technology affects the efficiency, competition, and bank pricing behavior.
Dede explained, for regulators, this research implies that competition is beneficial to encourage banks to be more efficient and vice versa. The competition also stimulates banks to provide the best service for customers at relatively lower costs, resulting in more optimal economic costs. Authorities should focus on the ASEAN Banking Integration Framework (ABIF) implementation to increase competition that affects banking efficiency.
“However, there need to be regulations that limit competition among banks as it can affect the economy as a whole,” he said.