COMPETITION AND LEADER-FOLLOWER INTERACTIONS: PANEL ESTIMATES ON INDONESIAN BANKING

Abstract

This paper discusses banking competition and leader-follower relationship. Banking competition is investigated using some specification from Monti-Klein model that allows leader-follower (i.e. Stackleberg) relationship, the possibility of Cournot competition and other form of competition. We use monthly observations across 119 banks listed in Indonesia using the standard panel fixed effect methodology to absorb time-invariant unobserved heterogeneity and dynamic panel data to minimize the risks of endogeneity. The estimation suggests the leader-follower relationship among banks exist both on loan and deposit markets. The results are mostly consistent across different groups and on full sample estimates, although are quite different in magnitudes. While leader-follower relationship is dominantly occur in credit market, there are some evidence of simultaneous appearance of both leader-follower and Cournot interactions on the deposit market

Full text

21Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
COMPETITION AND LEADER-FOLLOWER
INTERACTIONS: PANEL ESTIMATES
ON INDONESIAN BANKING
Peter Abdullah1
Pakasa Bary
Rio Khasananda
Rahmat Eldhie Sya’banni
This paper discusses banking competition and leader-follower relationship. Banking competition is
investigated using some specification from Monti-Klein model that allows leader-follower (i.e. Stackleberg)
relationship, the possibility of Cournot competition and other form of competition. We use monthly
observations across 119 banks listed in Indonesia using the standard panel fixed effect methodology
to absorb time-invariant unobserved heterogeneity and dynamic panel data to minimize the risks of
endogeneity. The estimation suggests the leader-follower relationship among banks exist both on loan and
deposit markets. The results are mostly consistent across different groups and on full sample estimates,
although are quite different in magnitudes. While leader-follower relationship is dominantly occur in
credit market, there are some evidence of simultaneous appearance of both leader-follower and Cournot
interactions on the deposit market.
Abstract
Keywords: Banking, monetary policy
JEL Classifications: C70, E50, G21
1 Peter Abdullah is a Senior Economist at Bank Indonesia, while Pakasa Bary, Rio Khasananda and Rahmat Eldhie Sya’banni are
Economists. The views expressed on this paper are those of the authors’ and not necessarily represents the views of Bank
Indonesia.

22 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
I. INTRODUCTION
Our preliminary investigation indicates that the response of deposit interest rate and lending rate
towards monetary policy in Indonesia has been asymmetric. The response of deposit rate has
been relatively proportional and timely, whereas the response of lending rate has been lagging
and relatively rigid. This could be an indication of uncompetitive market (Cottarelli dan Kourelis,
1994; Borio and Fritz, 1995). Moreover, responses towards monetary policy among group of
banks with different assets are heterogenous. Therefore, it indicates that some behavior related
to individual market power and interaction among banks affect the industry response.
Those problems, which related to competition behavior in banking industry, are likely to
affect the monetary policy transmission, particularly through interest rate channel and lending
channel. Further, competition is also a relevant factor to increase efficiency (Hafidz dan Astuti,
2013) and to determine interest rates (Muljawan et. al. 2014).
Previous literatures conduct empirical estimates on this issue by applying widely-used
competition indicators such as Lerner Index (Amidu and Wolfe, 2013), Hirchman-Herfindahl
Index (Adams and Amel, 2011), Panzar and Rosse H-Statistic (Gunji et. al, 2007; Oliviero et.
al., 2011) and Boone Indicator (van Leuvensteijn, 2013). This method, particularly by using
Lerner, Boone Indicator or H-Statistic can indicate “conduct and performance” effect, whereas
HHI only capture market structure effect. However, those approaches are generally explains
competition on the whole industry, and does not capture asymmetrical interactions among
individual banks.
Ariefianto (2009) suggest estimating specification that derived from Monti-Klein model
that allows possible indication of leader-follower or Cournot interactions. This model is originally
based on Cournot interactions (see Klein, 1971; Frexias and Rochet, 2008). In addition, Toolsema-
Veldman and Schoonbeek (1999) had derived a Stackleberg version of this model. However,
Ariefianto (2009) estimates are based on arbitrary choice of samples.
This research will examine competition in banking industry using industrial organization
approach, also by improving methods to determine sample selection. Further, this research will
model interest rate setting on a bank towards monetary policy using game theory and analyze
the implications on monetary policy transmissions. Particularly, this research tries to answer
three questions; first, how is the competition behavior on Indonesian banking industry? Second,
if the leader(s) exist, how the followers will respond to leader’s decisions? Third, how does the
bank competition indirectly affect monetary policy transmissions?
This research is aim to contribute a more interactive indication about competition behavior
on banking industry. In addition, this research potentially indicates a recommendation to
increase the effectiveness of monetary policy transmission. We limit the analysis on the case
of Indonesia.

23Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
II. THEORY
Bank competition is essential to be discussed. Competition between banks tends to raise
efficiency (Hafidz and Astuti, 2013). Empirically, the degree of competition is one of determining
factors of interest rate (Muljawan et. al. 2014). Moreover, a more concentrated banking industry
has more rigid interest rate movement (Hannan and Berger, 1991; Neumark and Sharpe, 1992).
However, Adams and Amel, (2011) said that the relationship between banking competition
and monetary policy response are ambiguous.
Previous empirical studies conduct estimates on this issue by applying a widely-used
competition indicators such as Lerner Index (Amidu and Wolfe, 2013), Hirchman-Herfindahl
Index (Adams and Amel, 2011) and Panzar and Rosse H-Statistic (Gunji et. al, 2007; Oliviero
et. al., 2011). This method, particularly by using Lerner or H-Statistic can indicate “conduct
and performance” effect, whereas HHI only capture market structure effect. However,
those approaches generally provide insights on the industry as a whole, and cannot capture
asymmetrical interactions among individual banks.
Ariefianto (2009) suggest estimating specification that derived from Monti-Klein model
that allows possible indication of leader-follower relationship or Cournot interactions. This
model is originally based on Cournot interactions (see Klein, 1971; Frexias and Rochet, 2008).
In addition, Toolsema-Veldman and Schoonbeek (1999) had derived a Stackleberg version of
this model.
We recall a form of Monti-Klein model, by noting the following assumptions:
1. Two bank products, deposit and credit, are homogenous. Bank 1 and bank 2 have linier
function of deposit and credit demand:
r
L
= α - βL ; L= L
1
+ L2
2. Banks using deposit and credit quantities as strategic instrument
3. Linier cost function:
(1)
(2)
(3)
(4)
r
D
= a + bD ; D = D
1
+ D2
C
1
(L
1
, D
1
) = γ
L,1
L
1
+ γ
D,1
D1
C
2
(L
2
, D
2
) = γ
L,2
L
2
+ γ
D,2
D2
4. Interbank money market rate (r) is exogenous variable as it affected by monetary policy of
Bank Indonesia.

24 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
5. Profit function of bank:
�
i
= r
L
L
i
- r
D
D
i
- r(L
i
- D
i
) - C
i
(L
i
, D
i
)
Combining equations (1) to (5) above, obtained maximization utility function of bank:
(5)
(6)
(7)
(8)
(9)
First partial differentiation of (6) to lending and credit variable derives equation (7) and
(8) as follows:
L
i = LP
-
α - r - γ
L,i
2β
1
2
L
-i
-
1
2
D
i = DP
-
r - a + γ
D,i
2b
1
2
D
-i
-
1
2
Equation (7) and (8) show that the quantity of credit (deposit) of a bank is affected inversely
by that the quantity of credit (deposit) of the leader and those of other competitor.
III. METHODOLOGY
3.1. Empirical Specification
For the first analysis, we use a general specification that allows leader-follower (i.e. Stackleberg)
relationship, the possibility of Cournot competition and other form of Competition, as in
Ariefianto (2009).
From (7) and (8), we have basic understanding that one bank’s lending (deposit) depends
on its leader and other bank’s lending (deposit). Combining (7) and (8) with macroeconomics and
banking variables, where , the general specification can be represent as follows:
Xit = α + β1Xp
t + β2X-i,t + Σk
γkYk
t + Σm
μmZm
it + u
it
Xit is the amount of loan (deposit) of a particular bank i at t, Xp
t is the amount of loan
(deposit) supplied by the leader, X-i,t is the amount of loan (deposit) supplied by the rest of
followers, Yk
t is the kth panel-invariant factor, zm
it is the mth panel-variant factor, and uit is the
stochastic error. a is a constant.

25Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
The possible key hypotheses on Equation (9) are as follows: 1. If b1 < 0 and b2 < 0, it
indicates that the leader and other competitor are significant to affect bank’s quantity of credit/
deposit; 2. If b1 < 0 and b2 = 0, then the market is indicated to be consistent to leaderfollower
relationship (i.e. Stackleberg competition). 3. If b2 < 0, b1 = 0, then the market is indicated to
be consistent with Cournot model, or it can be inferred that there is no leader exist. 4. If b1 >
0 and/or b2 > 0 , it may indicate other form of competition that is not usually predicted.
Control variables, the “panel variant” or “panel invariant” factors consists of
macroeconomic variables (GDP, inflation, exchange rates, and benchmark interest rates), specific
internal bank variables (non-performing loans, capital adequacy ratio, etc), and industry variables
(HHI). This list of control variables are partly based on Claessens and Laeven (2004) and Angellini
dan Certorelli (2003). Further details of these variables are reported on the appendix.
We use two approaches to estimate Equation (9), namely: 1. the standard panel fixed
effect methodology to absorb time-invariant unobserved heterogeneity (by replacing a with ai
); 2. dynamic panel data as in Arellano-Bond (1991) to minimize the risks of endogeneity (by
replacing a with Xit-1).
3.2. Grouping of Observations
Observations consist of monthly data of 119 banks listed in Indonesia. The main data source
are Bank Indonesia and CEIC. Observations are grouped based on an identification of whether
banks compete on a relevant market, where the products across banks have a high degree
of interchangeability. This step is crucial as competition is the central issue in this paper. To
facilitate this matter, on estimations on credit market we use degree of similarity on credit across
economic sectors between each bank and the leader candidate, using the following formula:
(10)
Xi =
-
xik
Σk xik
K
k
ΣxIk
Σk xIk
xik is bank i’s lending on sector k, and xIk is bank leader’s lending on the corresponding
sector. This formula was modified and inversed from trade complementary index (Michaely,
1996), which is used generally in international trade analysis. The leader candidates are Bank
A, Bank B, Bank C, Bank D, and Bank E.
Similarly, for estimations on deposits, we use degree of similarity on deposit spatially
(i.e. individual bank’s deposit distribution across provinces) between each bank and its leader
candidate, using following representation:

26 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
xim is bank i’s deposits on province m, and xIm is the leader’s quantity of deposits on the
corresponding province.
Each group estimates applies to a group of observations that consists of 30 banks with
the lowest value of Xi. As we have 5 suspected leaders (Bank A, B, C, D, E), then we have 5
groups (Group A, B, C, D, E, respectively) to estimate. In addition, we conduct estimation using
all observations as a robustness test for omitted variable bias regarding omitted competitors
across groups. To note, for full-sample estimations, we define the quantity of leaders’ deposit/
credit is the sum of those of all leader candidates.
IV. RESULTS AND ANALYSIS
4.1. Credit Market
The results of fixed effect panel regression (Table IV.1-1) shows that four groups of banks,
each with Bank A, Bank B, Bank D, and Bank E as the leader respectively, follow Stackleberg
competition, without any indication of Cournot competition. The highest follower response
to the leader’s choice of credit quantity is indicated on the group of banks with Bank B as the
leader (i.e. Group B). Moreover, GDP have positive impact to dependent variables with elasticity
close to unity. Non-performing loan (NPL) has negative impact to bank lending.
Xi =
-
xim
Σk xim
M
m
ΣxIm
Σk xIm
(11)
Table 1.
Fixed Effect Panel Estimation for Credit
Group A Group B Group C Group D Group E
VARIABLES
Leader Credit
Follower Credit
CONTROL
VARIABLES
1. Macroeconomics
2. Structural
3. Internal bank
Constant
Observations
R-squared
Number of bank
Hausman Prob
GDP, inflation rate, interbank rate, exchange rate
HHI, credit diversification, credit to PDB ratio
NP L, CAR, BOPO
-0.0189**
(0.00799)
0.0961
(0.204)
-4.483***
(1.107)
420
0.902
12
0.008
-0.0557**
(0.0232)
0.0209
(0.168)
-3.426*
(1.601)
525
0.862
15
0.099
-0.0107
(0.0307)
-0.110
(0.253)
-4.104***
(1.236)
525
0.914
15
0.093
-0.0175*
(0.00923)
0.215
(0.285)
-3.940***
(1.196)
525
0.900
15
-0.0292*
(0.0148)
0.375
(0.345)
-3.360
(3.170)
525
0.720
15
0.000
Dependent variable: Log (Credit) (…) = Robust standard errors
Significance level: *** p<0.01, ** p<0.05, * p<0.1

27Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
Dynamic panel data for credit indicates a leader-follower relationship for all groups
estimated, and also consistent for full-sample estimates, that contain all banks in the
industry.
Bank C and Bank B groups follows Stackleberg and Cournot competition model
simultaneously. The highest response to the leader’s decision is indicated on the group of banks
with Bank D as the leader. GDP have positive impact with short term elasticity 0.14 – 0.30.
Interbank money market rate and NPL variables are negative, tends to be inelastic. The lag
dependent parameters are estimated below unity, thus indicate dynamic stability.
4.2. Deposit Market
The fixed effect panel data regression shows that a leader-follower relationship occurs in all
groups of observations, except for the groups of observations with Bank C and Bank A as the
leader, respectively. Cournot competition model applies for all groups, except for the group
of banks with Bank A as the leader. The highest follower response to the leader’s decision
occurs on the group of banks with Bank D as the leader. GDP have positive impact to quantity
of deposit with elasticity that close to unity, especially in groups of banks with Bank C, Bank
A, and Bank D the leader, respectively. Non-performing loan (NPL) has a negative impact to
bank’s deposit amount.
Table 2.
Dynamic Panel Estimation for Credit
Group A Group B Group C Group D Group E Full Sample
VARIABLES
Leader Credit
Follower Credit
CONTROL
VARIABLES
1. Macroeconomics
2. Structural
3. Internal bank
Constant
Observations
Number of bank
Sargan test prob
Arellano-Bond
AR(2) prob
GDP, inflation rate, inter-bank rate, exchange rate
HHI, credit diversification , credit to PDB ratio
NPL, CAR, BOPO
-0.0638**
(0.0263)
-0.0084
(0.0414)
0.983***
(0.00495)
913
27
0.331
0.967
-0.0585***
(0.0184)
-0.122**
(0.0521)
0.997***
(0.00595)
945
27
0.278
0.762
-0.0447**
(0.0197)
-0.167***
(0.0419)
0.992***
(0.0102)
945
27
0.212
0.393
-0.134**
(0.0680)
-0.0834
(0.0942)
0.983***
(0.00611)
832
26
0.267
0.105
-0.0247**
(0.0108)
-0.0422
(0.0541)
0.970***
(0.0105)
840
24
0.514
0.413
-0.208*
(0.121)
0.163
(0.138)
0.965***
(0.00647)
3,521
105
0.898
0.110
Dependent variable: Log(Credit) (…) = Robust standard errors
Significance level: *** p<0.01, ** p<0.05, * p<0.1

28 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
In general, dynamic panel regression indicates that Stackleberg and Cournot competition
models apply simultaneously for all group estimates and full-sample estimates.
The highest response occurs on the group of banks with Bank D as the leader (i.e. Group
D), where 10% increase on Bank D’s deposit will be responded by, on average, 3.6% decrease
Table 3
Fixed Effect Panel Estimation for Deposit
Group A Group B Group C Group D Group E
VARIABLES
Leader deposits
Follower deposits
CONTROL
VARIABLES
1. Macroeconomics
2. Structural
3. Internal bank
Constant
Observations
R-squared
Number of bank
Hausman Prob.
GDP, inflation rate, interbank rate, exchange rate
HHI, credit diversification, credit to PDB ratio
NPL, CAR, BOPO
-0.106
(0.138)
-0.607
(0.426)
17.76**
(6.755)
391
0.430
12
0.000
-0.122**
(0.0421)
-0.887**
(0.316)
14.50***
(3.571)
408
0.558
12
-0.0968
(0.103)
-0.831*
(0.390)
8.653***
(2.630)
408
0.493
12
-0.359**
(0.127)
-1.893***
(0.562)
23.26***
(3.152)
380
0.526
12
-0.166**
(0.0639)
-0.974*
(0.461)
4.441
(7.023)
403
0.271
14
0.029
Dependent variable: Log(Deposits) (…) = Robust standard errors
Significance level: *** p<0.01, ** p<0.05, * p<0.1
Table 4.
Dynamic Panel Estimation for Bank’s Deposit
Group A Group B Group C Group D Group E Full Sample
VARIABLES
Leader deposits
Follower deposits
CONTROL
VARIABLES
1. Macroeconomics
2. Structural
3. Internal bank
Lag dependent
Observations
Number of bank
Sargan Test Prob
Arellano Bond
AR(2) prob
GDP, inflation rate, interbank k rate, exchange rate
HHI, credit diversification, credit to PDB ratio
NPL, CA R, BOPO
-0.466***
(0.0541)
-0.231***
(0.0860)
0.989***
(0.00834)
798
25
0.228
0.512
-0.269***
(0.0419)
-0.165*
(0.0851)
0.991***
(0.00797)
822
25
0.202
0.632
-0.185***
(0.0455)
-0.370***
(0.116)
0.992***
(0.00968)
774
25
0.363
0.733
-0.298***
(0.0711)
-0.256***
(0.0900)
0.999***
(0.0122)
846
25
0.181
0.515
-0.209***
(0.0402)
-0.777***
(0.170)
0.937***
(0.0250)
754
26
0.569
0.394
-0.471***
(0.128)
-0.339***
(0.0582)
0.988***
(0.0171)
3,212
106
0.147
0.429
Dependent variable: Log (deposits) (…) = Robust standard errors
Significance level: *** p<0.01, ** p<0.05, * p<0.1

29Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
on follower’s deposit. GDP have positive impact to deposit variables. Herfindahl–Hirschman
Index (HHI) has negative impact with small effect. Lag dependent coefficients below 1 indicates
dynamic stability of the model.
V. CONCLUSIONS
The estimation results suggest a leader and follower relationship among banks on most of the
grouped observations, although with some variations in magnitude. Generally, competition
between followers is insignificant on credit market, but is significant on deposit market. Leader
and follower competition result can be viewed on Table 3 below. Control variables, such as:
GDP, inflation rate, interbank rate, exchange rate, HHI, credit diversification, credit to PDB ratio,
and operational bank ratios are generally show consistent parameters as expected. All-sample
estimates also suggesting similar results, and hence confirming the robustness of selected-
sample regressions. For estimates using dynamic panel regressions, all estimations fulfill dynamic
stability and well represent the data variations. Moreover, the estimations met the exogeneity
assumptions for instrumental variables.
Table 5.
Group Summary
Fixed Effect
Arellano-Bond
Arellano-Bond
Competition
Highest Response
Competition
Highest Response
Competition
Stackleberg,
Except Group C
Group B
Stackleberg with Cournot
for Group C and Group B
Group D and Group B
Stackleberg
Stackleberg and Cournot,
Except Group C and Group A
Group D
Stackleberg and Cournot
Group D
Stackleberg and Cournot
simultaneously
Panel Data Lending Deposit
Although our results indicate that leader-follower relationship is generally hold on both
credit and deposit market, either in separate groups or full sample, this paper still put restrictive
assumptions on the leaders’ behavior. The interactive responses between leaders have yet to
be analyzed without any prior restrictions. The suggestion for further research is to improve
the empirical specification. For instance, to use credit/deposit similarities as a weight matrix
that attached to the leader-follower coefficients to allow multiple leaders at once as well as to
allow heterogeneous response towards each leader’s decisions.

30 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
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32 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
APPENDIx
Table 1.
List and Notes of Dataset
Main Variables
Credit
Deposit
Credit/deposit of the leader
Credit/deposit of the followers
Macroeconomics
GDP
Inflasi
Interest rate
Exchange rates
Industry
HHI
Credit to GDP ratio
Internal Bank
NPL
CAR
BOPO
Credit to asset ratio
Bank Indonesia
Bank Indonesia
Bank Indonesia
Bank Indonesia, authors’
calculation.
CEIC
CEIC
CEIC, Bank Indonesia
CEIC
Bank Indonesia, authors’
calculation.
Authors’ calculation
Bank Indonesia
Bank Indonesia
Bank Indonesia
Bank Indonesia,
authors’ calculation
Total credit of individual bank data
Total deposit of individual bank data
5 banks as candidate (Bank A, B, C, D, E)
Industry data – data on a particular bank observed
Nominal, interpolated to monthly using quadratic
match sum
Year-on-year terms
Interbank call money
Using credit/deposit approach
As a proxy to indicate the industry
significance on the economy
Share of credit with quality 3 to 5
Operational cost / revenues
As a proxy to indicate business diversification
Variables Source Notes

33Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
Table 2.
Fixed Effect Estimates on Credit Market
VARIABLES
Kredit leader
Kredit follower
Variabel kontrol
1. Makroekonomi
PDB
Inflasi
Suku bunga PUAB
Real Exchange Rate
2. Struktural
HHI
Diversifikasi
Rasio kredit/PDB
3. Internal bank
NPL
CAR
BOPO
Constant
Observations
R-squared
Number of bank
-0.0189**
(0.00799)
0.0961
(0.204)
1.041***
(0.236)
-0.000251
(0.00135)
-0.00530
(0.00556)
-0.182*
(0.0836)
-0.000474
(0.000411)
-0.199***
(0.0459)
0.0694***
(0.0180)
-0.0197**
(0.00648)
-9.92e-05***
(1.31e-05)
1.91e-05
(0.000271)
-4.483***
(1.107)
420
0.902
12
-0.0557**
(0.0232)
0.0209
(0.168)
1.124***
(0.208)
-0.00365
(0.00298)
-0.00556
(0.0113)
-0.355***
(0.0730)
0.000980
(0.000663)
-0.238***
(0.0688)
0.0685***
(0.0209)
-0.0288***
(0.00416)
0.000721
(0.00162)
0.000229
(0.000165)
-3.435*
(1.795)
525
0.862
15
-0.0107
(0.0307)
-0.110
(0.253)
1.185***
(0.230)
-0.000910
(0.00200)
-0.0127*
(0.00652)
-0.214***
(0.0575)
0.00102**
(0.000437)
-0.125***
(0.0324)
0.107***
(0.0190)
-0.00764
(0.00826)
-0.00197
(0.00362)
0.000250**
(9.83e-05)
-4.104***
(1.236)
525
0.914
15
-0.0175*
(0.00923)
0.215
(0.285)
0.908***
(0.280)
0.000500
(0.00164)
-0.0116
(0.00935)
-0.211
(0.131)
-8.79e-05
(0.000573)
-0.148***
(0.0454)
0.0661***
(0.0150)
-0.0280***
(0.00151)
-0.00249
(0.00376)
0.000244
(0.000200)
-3.940***
(1.196)
525
0.900
15
-0.0292*
(0.0148)
0.375
(0.345)
0.933***
(0.199)
0.000488
(0.00417)
-0.00582
(0.0231)
-0.250**
(0.105)
-0.00108
(0.000646)
-0.0771
(0.0813)
0.144*
(0.0695)
-0.0248**
(0.00956)
-0.00345
(0.00669)
-0.000663
(0.000514)
-5.745
(4.673)
525
0.720
15
Group A Group B Group C Group D Group E

34 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
Table 3.
Dynamic Panel Estimates on Credit Market
Variabel
Kredit leader
Kredit follower
Variabel kontrol
1. Makroekonomi
PDB
Inflasi
Suku bunga PUAB
Exchange Rate
2. Struktural
HHI
Rasio kredit/PDB
Diversifikasi
3. Internal bank
BOPO
NPL
CAR
Lag dependen
Observations
Number of bank
-0.0638**
(0.0263)
0.00843
(0.0414)
0.131**
(0.0545)
0.00279*
(0.00148)
-0.0157**
(0.00643)
-0.111
(0.0698)
-0.000484*
(0.000280)
0.00409*
(0.00241)
-0.0131
(0.0111)
-0.000100
(0.000197)
-0.00170
(0.00128)
-0.0007***
(0.000243)
0.983***
(0.00495)
913
27
-0.0585***
(0.0184)
-0.122**
(0.0521)
0.205***
(0.0632)
0.000804
(0.000889)
-0.0155***
(0.00449)
-0.142***
(0.0492)
0.00055***
(0.000202)
0.000956
(0.00156)
0.00464
(0.00459)
5.70e-05
(0.000125)
-0.00558***
(0.00157)
0.00113**
(0.000526)
0.997***
(0.00595)
945
27
-0.0447**
(0.0197)
-0.167***
(0.0419)
0.305***
(0.0545)
0.00250***
(0.000825)
-0.0236***
(0.00513)
-0.251***
(0.0541)
-5.84e-06
(0.000188)
0.00460
(0.00402)
-8.21e-05
(0.00584)
-0.000195
(0.000152)
-0.0064***
(0.00208)
0.000980
(0.000717)
0.992***
(0.0102)
945
27
-0.134**
(0.0680)
-0.0834
(0.0942)
0.189***
(0.0487)
-0.000652
(0.000915)
-0.0176***
(0.00474)
-0.0198
(0.0486)
0.00075***
(0.000211)
0.00719***
(0.00222)
0.0120***
(0.00380)
-0.000186
(0.000155)
-0.0070***
(0.00139)
-6.58e-05
(8.72e-05)
0.983***
(0.00611)
832
26
-0.0247**
(0.0108)
-0.0422
(0.0541)
0.144**
(0.0731)
0.00178
(0.00163)
-0.0178**
(0.00759)
-0.115
(0.0812)
-0.000501
(0.000321)
0.00609
(0.00457)
0.0174***
(0.00496)
5.03e-05
(0.000154)
-0.00219
(0.00379)
-0.000149
(0.000722)
0.970***
(0.0105)
840
24
-0.609*
(0.314)
0.642*
(0.365)
0.0970
(0.0847)
-0.000783
(0.00165)
-0.0109*
(0.00640)
0.0374
(0.0473)
0.00104**
(0.000522)
0.00516**
(0.00248)
-0.00155
(0.00350)
-2.89e-05
(0.000102)
0.00305
(0.00643)
-0.00086***
(0.000310)
0.986***
(0.00939)
3,319
105
Group A Group B Group C Group D Group E Full Sample

35Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
Table 4.
Fixed Effect Estimates on Deposit Market
VARIABLES
DPK leader
DPK follower
Variabel kontrol
1. Makroekonomi
PDB
Inflasi
Suku bunga PUAB
Exchange Rate
2. Struktural
HHI
Diversifikasi
Rasio kredit/PDB
3. Internal bank
NPL
CAR
BOPO
Constant
Observations
R-squared
Number of bank
-0.106
(0.138)
-0.607
(0.426)
0.222
(0.336)
-0.0365***
(0.0107)
0.179**
(0.0788)
0.0575
(0.235)
-0.00513**
(0.00166)
0.124***
(0.0307)
0.164***
(0.0395)
-0.000784
(0.0246)
0.00509***
(0.000583)
0.000440
(0.000889)
17.76**
(6.755)
391
0.430
12
-0.122**
(0.0421)
-0.887**
(0.316)
1.078***
(0.301)
-0.00629**
(0.00277)
0.0574***
(0.0140)
-0.489**
(0.158)
-0.00624***
(0.00118)
0.215***
(0.0443)
0.121***
(0.0273)
0.00186
(0.0141)
-0.0159***
(0.00454)
4.76e-05
(0.000387)
14.50***
(3.571)
408
0.558
12
-0.0968
(0.103)
-0.831*
(0.390)
1.575***
(0.429)
-0.0103
(0.00690)
0.0312
(0.0207)
-0.749***
(0.228)
-0.00669***
(0.00170)
0.0191
(0.0610)
0.105***
(0.0331)
-0.0185
(0.0172)
-0.0187***
(0.00414)
0.000648
(0.000605)
8.653***
(2.630)
408
0.493
12
-0.359**
(0.127)
-1.893***
(0.562)
1.580**
(0.628)
-0.0170***
(0.00314)
0.128***
(0.0154)
-0.491**
(0.204)
-0.00620***
(0.00127)
0.0762***
(0.0216)
0.165***
(0.0367)
0.0156
(0.0154)
-0.000991
(0.000869)
0.000629
(0.000538)
23.26***
(3.152)
380
0.526
12
-0.166**
(0.0639)
-0.974*
(0.461)
2.199***
(0.523)
-0.0121*
(0.00569)
-0.00557
(0.0331)
-0.855*
(0.443)
-0.0150***
(0.00437)
0.0228***
(0.00370)
0.418
(0.270)
0.00430
(0.0314)
-0.0111**
(0.00386)
-4.96e-05
(0.000194)
4.441
(7.023)
403
0.271
14
Group A Group B Group C Group D Group E

36 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
Table 5.
Dynamic Panel Estimates on Deposit Market
VARIABLES
DPK leader
DPK follower
Variabel kontrol
1. Makroekonomi
PDB
Inflasi
Suku bunga PUAB
Exchange Rate
2. Struktural
HHI
Rasio kredit/PDB
Diversifikasi
3. Internal bank
BOPO
NPL
CAR
Lag dependen
Observations
Number of bank
-0.466***
(0.0541)
-0.231***
(0.0860)
0.857***
(0.0963)
0.00259
(0.00269)
0.0161**
(0.00799)
-0.0597
(0.0856)
-0.00352***
(0.000461)
0.00301
(0.00209)
-0.0137***
(0.00519)
0.000596
(0.000379)
-0.00265
(0.00261)
0.000204
(0.000298)
0.989***
(0.00834)
798
25
-0.269***
(0.0419)
-0.165*
(0.0851)
0.394***
(0.114)
0.00409*
(0.00240)
0.0328***
(0.0110)
0.419***
(0.123)
-0.00266***
(0.000462)
0.00318
(0.00253)
-0.00451
(0.00768)
0.000765**
(0.000366)
-0.00428***
(0.00158)
0.000230
(0.000292)
0.991***
(0.00797)
822
25
-0.185***
(0.0455)
-0.370***
(0.116)
0.643***
(0.153)
0.00252
(0.00231)
0.0149*
(0.00837)
-0.0256
(0.0966)
-0.00206***
(0.000495)
0.00245
(0.00234)
0.00949*
(0.00516)
0.000229
(0.000344)
-0.00225
(0.00150)
-0.000343
(0.000355)
0.992***
(0.00968)
774
25
-0.298***
(0.0711)
-0.256***
(0.0900)
0.652***
(0.156)
0.00539**
(0.00262)
-0.0178
(0.0109)
-0.205*
(0.119)
-0.000923
(0.000591)
0.00505
(0.00532)
0.0133
(0.0124)
0.000398
(0.000506)
-0.00583
(0.00532)
-0.000152
(0.000396)
0.999***
(0.0122)
846
25
-0.209***
(0.0402)
-0.777***
(0.170)
0.903***
(0.188)
-0.00336
(0.00609)
0.0602**
(0.0236)
0.351*
(0.196)
-0.00369***
(0.00118)
0.0763**
(0.0344)
-0.00125
(0.00194)
0.000542*
(0.000327)
-0.0161
(0.0129)
-0.000823
(0.00117)
0.937***
(0.0250)
754
26
-0.471***
(0.128)
-0.339***
(0.0582)
0.776***
(0.218)
-0.00392
(0.00315)
0.0380**
(0.0190)
0.240
(0.169)
-0.000771
(0.00114)
0.00844
(0.00541)
-0.00322**
(0.00154)
0.00101*
(0.000590)
0.0109
(0.00853)
0.00778***
(0.000680)
0.988***
(0.0171)
3,212
106
Group A Group B Group C Group D Group E Full Sample

37Competition and Leader-Follower Interactions: Panel Estimates on Indonesian Banking
Graph 1. Credit Market: Dynamic Panel Actual Vs. Fitted Values
Graph 2. Deposit Market: Dynamic Panel Actual Vs. Fitted Values

38 Buletin Ekonomi Moneter dan Perbankan, Volume 19, Nomor 1, Juli 2016
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