3. Data and Methodology
3.1 Data
The data used in this study relate to all public listed banks in the Indonesian Stock Exchange (BEI) as included in the BEI database. Annual financial statements were obtained from the BEI database. The data are deflated with relevant consumer price index (CPI): this is commonly done in frontier studies to ensure that performance is not due to inflationary effect on variables. The data relate to 18 commercial banks over 2004 and 2008. Table 1 presents a summary of descriptive statistics namely means and standard deviations of the input/output variables used. The crucial issue in this research is to choose the appropriate inputs and outputs variables to develop the efficiency models. There is still no universal agreement as to the explicit definitions and measurement of a bank’s inputs and outputs. In general, the definitions of input and output depend on a particular set of banking concepts. This study follows the commonly adopted intermediation approach (Sealey and Lindley 1977) for identifying and applying the models to banks.