Analysis of Competitiveness of Banks in Indonesia in the Era of the ASEAN Economic Community

Filipus Argentano Guntur SP, Agustinus Suryantoro


The ASEAN Economic Community has 5 principles, namely freedom of movement for goods, services, investment, capital and educated labor. The implementation of the ASEAN Economic Community (MEA) for Indonesia has positive and negative impacts. The positive impact are the wider product market and input, while the negative is that Indonesia is a market for other ASEAN countries. With this condition, then, banks, as financial institutions, have wide opportunities to develop themselves and cover all ASEAN countries; but on the other hand, foreign banks from other ASEAN countries will also enter Indonesia and become competitors of financial institutions in Indonesia. One of the opportunities to develop themselves is to expand credit which is the main activity and income of bank as financial institution. Credit expansion is highly determined and is influenced by the loan interest rates of these banks. It is interesting to see what factors influence the determination of loan interest rates in banks in Indonesia. The research results show that the credit interest rate is the key to economic growth and a reduction in loan interest rates can be done by strengthening banking capital.

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