The THE IMPACT OF FOREIGN SHAREHOLDINGS, FOREIGN COUNTRY ADVANCEMENT, AND CORPORATE GOVERNANCE MODERATING ROLE ON BANK EFFICIENCY

Abstract

This research is intended to open a new  perspective on how foreign shareholdings in Indonesia’s banking industry affect the efficiency of its acquired local banks by analyzing the foreign shareholdings percentage/portion and also analyzing its country of origin that till date is still scant.  The results of the studies show that percentage of foreign shareholdings positively affecting efficiency of acquired local banks only if the foreign shareholders is majority shareholders and originating from developed countries.  The increase in the size of the Board of Directors tends to decrease the efficiency of the acquired local banks and lastly, the presence of Foreign Director has a positive moderating effect on strengthening the effect of percentage of foreign shareholdings on the efficiency of the acquired local banks.   The original contribution of this studies is that the percentage of foreign shareholdings and its country of origin are two factors that cannot be separated in affecting the level of efficiency of its acquired local bank.