Efficiency of the intermediation function of Regional Development Banks (BPD) in Indonesia: Data Envelopment Analysis (DEA) approach

Regional Development Banks (BPD) have a strategic role in encouraging regional economic growth through the financial intermediation function. However, the effectiveness of these functions still faces various challenges, such as low productive credit disbursement and high dependence on local government funds. This study aims to measure the level of efficiency of the intermediation function of Regional Development Banks (BPD) in Indonesia during the period 2020–2024 using the Data Envelopment Analysis (DEA) method. The data used included 27 BPDs with input variables (Total Assets, Third-Party Funds, Labor Expenses) and outputs (Loans Provided, Net Interest Income). The results of the study show that the average efficiency of BPD intermediation is 94.54%, with a downward trend in 2024 to 92.2%. Only three BPDs have been consistently efficient for five years, namely the Central Kalimantan BPD, the West Java and Banten BPD (BJB), and the South and West Sulawesi BPD (Sulselbar). These findings indicate the need to optimize the use of inputs and increase credit distribution to achieve maximum efficiency. The implications of the study include policy recommendations in the form of BPD consolidation and strengthening of intermediation strategies.