Analysis of Banking Industry Efficiency Level: A Study of LQ-45 Company in Indonesian Stock Exchange (IDX)

Abstract

The banking sector is the backbone of a country's economy. The Indonesian banking sector's operational continuity will depend on each banking institution's ability to maintain high competitiveness. Financial ratios can be a measuring tool to see how far efficiency goals can be achieved. This study focused on financial sectors, particularly commercial banks listed on the Indonesian Stock Exchange (IDX) and indexed in LQ-45. This study uses a quantitative descriptive approach based on data from companies' financial statements for the period 2013-2019. The analysis of the efficiency level resulted in the average value of NPM and ROE, which decreased significantly from 2013 to 2016 and 2017, which shows little variability (relatively homogeneous) in that period. The global crisis's impact on the development of the banking industry is quite pronounced, marked by the lower average ROA score as evidence of commitment to return investors or shareholders for ownership of company assets, which is only around 2 percent.