Comparative analysis of financial risk, operational efficiency, and financial performance by region of regional development banks in Indonesia

Abstract

This study aims to explore and compare the financial performance of Regional Development Banks (RDBs) across Indonesia’s Western, Central, and Eastern regions, with a focus on financial risk, operational efficiency, and profitability. The research addresses whether regional disparities persist despite a nationally standardized regulatory framework. A comparative quantitative design was employed, utilizing panel data from 27 RDBs over the period 2019–2023. Key financial indicators—Capital Adequacy Ratio (CAR), Loan-to-Deposit Ratio (LDR), Non-Performing Loans (NPL), Operating Expenses to Operating Income (OEOI), Cost-to-Income Ratio (CIR), and Return on Assets (ROA)—were analyzed. Statistical methods including ANOVA and post hoc tests were applied to identify significant regional differences. The results reveal that while indicators related to capital adequacy, liquidity, and efficiency are statistically similar across regions, significant disparities exist in NPL and ROA. Central RDBs demonstrate superior credit quality with lower NPL ratios, whereas Eastern RDBs record higher ROA, likely due to semi-monopolistic market conditions and high-margin sectors. Despite uniform national regulations, regional economic structures continue to shape the financial outcomes of RDBs—particularly in terms of risk and profitability. Policymakers and regulators should adopt differentiated, region-specific oversight strategies. Enhanced risk management is required in high-ROA yet high-risk regions such as Eastern Indonesia, while fiscal–banking integration models from the Central region could be replicated to improve credit quality elsewhere.