Detail Cantuman

Abstract—The external environment is a challenge for the
banking industry in Indonesia. The dynamic changes of the
external environment influence the strategy and performance
financial in the global competition of the banking sector in
Indonesia. The objectives of this study are 1) to analyze the
effect of the external environment on low-cost strategy of the
banking in Indonesia, 2) to analyze the effect of low-cost
strategy on financial performance of the banking in Indonesia,
and 3) to analyze the effect of the external environment on the
financial performance of banking in Indonesia. Surveys are
conducted on 101 banks through a set of questionnaires, which
are given to the bank and collected directly by the researcher
as well as by post to the president director and director of the
banks in Indonesia. Data that have been collected are analyzed
by using linear structural relationship (LISREL) using
structural equation models (SEM). The results of this study
show three paths that influence the external environment, lowcost strategy, and the financial performance of banking in
Indonesia. First, the external environment that consists of an
environment has no significant influence on the low-cost
strategy. Second, the low-cost strategy has a significant
influence on financial performance, while the external
environment that consists of the environment has a significant
influence on financial performance. The results show that the
banks need to develop a low-cost strategy to improve financial
performance and increase awareness of the external
environment that can influence bank performance. Therefore,
it is important for decision-makers of the national banking
sector to develop a strategy to enhance the profitability and
competitiveness of banks given the current competition.
Keywords—environmental, low-cost strategy, financial
performance, banking