Challenging The Performance of A Restructured Indonesian Bank: A Case Study of Bank Mandiri's Merger and Recapitalization
This thesis evaluates the performance of former PT Bank Bumi Daya, PT Bank Dagang Negara, PT Bank Pembangunan Indonesia and PT Bank Ekspor Impor Indonesia before their merger into PT Bank Mandiri Tbk from 1996 to 1999, and the performance of PT Bank Mandiri Tbk after the merger recapitalization in 1999 to 2005. The specific aim of this research is to analyze the impact of the restructuring program of the bank based on (1) the performance of the bank as indicated by its significant financial ratios, as well as on (2) the financial intermediary function of the bank as demonstrated by its ability to generate revenues from lending activities and other organic banking business transactions. n The methodology being used in this thesis combines qualitative and quantitative studies, where the qualitative study covers a comprehensive review and observation on the bank's banking activities before and after the restructuring by adopting a case study method, while the quantitative part includes the utilization of bivariate statistical analysis by using statistical coefficient of correlation and performing t-test method. This research also compares and contrasts existing studies of banking crisis resolutions in other countries, which are relevant as examples of bank restructuring program.n The empirical findings of this research show that the restructuring enables the bank to generate profit but the role of the government recapitalization bonds was too dominant in the income received. In other words, post restructuring, the profit has not been primarily generated from the bank's main role as a financial intermediary and therefore the bank has not been able to fully perform its function as a financial intermediary. This study also reveals a contradiction that if the bank is to enhance its financial intermediary role (i.e. by way of making more loans), the potential increase in non performing loan (NPL) exists, which eventually exposes the bank to deteriorating Capital Adequacy Ratio (CAR).
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