Indonesia Conference Directory

The aim of the research is to study the value created by the foreign shareholders in Indonesia banking industry from 2016-2018. The research analyzed the performance of the foreign owned banks versus domestic owned banks. The banking industry is one of the main drivers of economic growth. The study focused on the 19 banks that are categorized as bank books 3 and 4 as per the central bank regulation. The shareholders status will be the independent variable and the main financial ratios will be dependent variables. The financial ratios are capital structure, credit risk, firm size and profitability ratio. We use non- parametric (Mann Whitney) and parametric (Dummy Variable Regression). The empirical results show that there are differences in profitability and firm size. The profitability was shown in return on assets, return on equity, economic value added. The firm size was shown in total asset and equity. The local banks performed better than foreign banks in return on assets, return on equity, economic value added and net interest margin. However, the foreign banks only performed better than local banks in equity size. There was no significant difference in capital structure and credit risk. The results is significant at  = 1% for return on asset, economic value added and equity size.