DO POLITICAL CONNECTIONS AFFECT THE PERFORMANCE OF INDONESIAN REGIONAL DEVELOPMENT BANKS?

Abstract

This study was conducted with the aim of examining whether Regional Development Banks (RDBs) in Indonesia which fall under the category as Government-Linked Companies (GLCs) can maintain their independence in performance when political relationships exist between these GLCs and the government as the owner. Data for the study was obtained directly from the official websites of 26 RDBs from the year 2013 to 2016. The collected data was analyzed quantitatively using the Generalized Least Square (GLS) method. The results show that political connections have no effect on the RDBs performance. This finding is consistent with our previous research on RDBs which suggests that even though RDBs are governmentowned banks, the operations of RDBs remain independent and professional.