PEER GROUP MODEL AS A REFERENCE OF BANKS PERFORMANCE ASSESSMENT
2

Universitas Pelita Harapan
Sekolah Tinggi Ilmu Ekonomi Wiyatamandala, Jakarta

Abstract

Banks operating in Indonesia condition rate are the result of the Banks assessment for their risk and performance. The assessment of a bank condition is measured by considering the peer group of the bank. Banks Peer group is a group of banks that have common conditions. The plotting of a bank peer group is based on the homogeneity of the banks condition concerning to the other banks. Besides that, by choosing banks that are classified as peer group it should be noted the suitability of banks business. Consider the important role of bank peer group, to be a benchmark of objective performance monitoring, the determination of banks peer group should be done objectively. The bank peer group model works by assessing the relative performance of bank variables which become a concern to a bank for the others through equalization of the bank core capital. This research was conducted to test the bank peer group model formulated by Sugiarto using cross section data per December 2016. To simulate the performance of the bank peer group model, Bank Jasa Jakarta which is operating in Indonesia will be used as an anchor bank. For the purpose for testing the performance of peer group model, the analysis performance of Bank Jasa Jakarta is compared to classified banks as peer group, especially to the variables that significantly affect the performance of bank such as Non-Performing Loan, Return on Assets and Return on Equity that have important role in bank sustainability. Determination of performance of the peer group model will use the data from bank publication report taken from website of Indonesia Financial Services Authority. The test results using cross section data indicate that the model of bank peer group formed is a reliable model consider that the results obtained from the model are able to represent the actual conditions. The test results show that it is possible to establish an objective bank peer group determination model using a statistical point of view.

Keywords: banks, peer group model, performance assessment

Topic: Financial Management and Accounting