THE BRANCH EXPANSION AND THE PERFORMANCE OF THE BANKS: THE CASE OF INDONESIA

• Main Authors: Hery Prasetyo, Sony Sunaryo
• Format: Article
• Language: Indonesian
• Published: Bank Indonesia 2015-11-01
• Series: Bulletin Ekonomi Moneter dan Perbankan
• Subjects: number of branches; employees; financial performance; industrial banking
• Online Access: https://www.bmeb-bi.org/index.php/BEMP/article/view/518

Opening new branches may help the banks to expand and is a priority for the banks to enlarge the public inclusion. Indonesian banking industry is currently not efficient and still focus more on networking the branches than improving the banking access to the public. This paper utilize the path analysis to see the link betweeen the branch expansion and the performance of the banks. The analysis shows that the increase of the number of branches and employees does not significantly influence the financial performance of the banking industry from the period of 2011-2012. This prove that the inefficiency of banking industry as one of the performance indicators of banking is not the main factor that be caused by increasing the number of branches and employees.