YOGYAKARTA - Stocks ownership and government intervention in banking affect adversely to the performance of national banks. The influence of government shareholding in the bank only has a positive effect on the Net Interest Margin (NIM), while on the Return on Assets (ROA), Return on Equity (ROE), Capital Adequacy Ratio (CAR), and Loan to Deposit Ratio (LDR) actually have a negative impact. This was raised in the open doctoral examination of Drs. Eko Budiwiyono, M.B.A. at the UGM Graduate School, Saturday (1/10). His promoter is Prof. Dr. Nopirin, MA., co-promoter Prof. Dr. Mohtar Mas'ud and Dr. Roberto Akyuwen.
Eko said that government intervention in state-owned bank occurred in the form of collusion, corruption, and nepotism. Activities that often been intervened by the government are employees’ recruitment, the selection of commissioners and directors, procurement of goods and services as well as lending. "The intervention led the bank management to become less optimal in its work because it’s ruining leadership style and work culture so that the bank performance could be stagnated and even declined," said the General Director of Bank DKI.
Based on the Eko’s research in 121 banks, the most influential factor on the banks performance is human resources. According to Eko, the ratio of personnel expenses to operating expenses as a proxy for the bank's attention to the HR showed a positive effect on all performance measures. Performance measures that provide the greatest response to the human resources factor are the LDR, CAR, ROE, NIM, and ROA. "These findings suggest that the banking industry and monetary authorities need to focus on improving the competence of human resources involved in the banking industry," said the member of the UGM Board of Auditors.
Eko added that bank that went public was positively proved capable of improving banking performance in terms of NIM and LDR. However, go-public gives a negative impact on ROA and ROE and has no effect on CAR. "Efforts to go public conducted by banks have not provided the maximum results and still need to be improved in the future to improve ROE and CAR," he said.
He suggested the government reduce its ownership in national banking and hand it to those that are able to manage the bank professionally. In addition to gradually reducing it, such reduction of ownership must be taken by considering the applicable regulations and the appropriate mechanisms so that the stocks release can give maximum results.