UNVEILING THE PERFORMANCE DRIVERS OF INDONESIA’S STATE-OWNED BANKS: A STRUCTURE–CONDUCT–PERFORMANCE PERSPECTIVE USING PANEL DATA ANALYSIS

Abstract

Indonesia's state-owned banks play a strategic role in shaping the country’s financial landscape, with substantial market dominance and influence over national banking performance. In an era marked by rapid digitalization and evolving market competition, it becomes crucial to examine how structural characteristics and internal efficiency influence financial outcomes. This study applies the Structure–Conduct–Performance (SCP) framework combined with panel data regression to examine how market dynamics and internal efficiency shape financial outcomes across five major banks: Bank Mandiri, BRI, BNI, BTN, and BRIS. Key variables include market share (MS), concentration ratio (CR4), and operational efficiency as proxied by the BOPO ratio (operating expenses to operating income), and their influence on banks’ ROA. The results show that a larger market share significantly enhances profitability, while higher efficiency, as indicated by lower BOPO, also contributes positively. In contrast, market concentration does not exhibit a significant impact. These results offer valuable insights for regulators and bank management seeking to enhance competitiveness and sustainability in a digitally evolving financial ecosystem.