EXAMINING EFFICIENCY OF REGIONAL DEVELOPMENT BANK IN INDONESIA: A MULTI-STAGE DEA APPROACH

The purpose of this research is to examine the efficiency regional development bank (BPD) in Indonesia for the period of 2011-2016 under a non-parametric data envelopment analysis (DEA) approach. The research commences determining input and output variables from 25 BPD based on three approaches i.e. intermediation, operation and asset. A Multi-stage DEA is adopted to generate the efficiency score, projected value and benchmark(s) from efficient frontiers. Input-orientated variable return to scale (VRS) assumption is specified in data analysis. The result indicates a significant difference in number of efficient BPD regarding the three variable approaches which is 28.0%, 24.0% and 8.0% respectively. Inefficiency caused by the underachieving outputs variables of the three approaches given the set of inputs consumed in the operations. The research reflects that benchmarks for inefficient BPD is not absolutely coming from the efficient BPD. Moreover, BPD with the greatest amount of core capital are consistently considered as the highest average efficiency score under three variable approaches. Keywords: Efficiency, Data Envelopment Analysis (DEA), Bank, Indonesi