Market Structure, Strategic Conduct, And Bank Performance: A Descriptive SCP Approach to Indonesia’s Banking Industry

This study examines the applicability of the Structure–Conduct–Performance (SCP) paradigm in Indonesia’s commercial banking sector over the period 2011–2024, focusing on the interrelationship among market structure, strategic conduct, and financial performance. The research employs a descriptive approach using secondary data published by the Financial Services Authority (OJK) and Bank Indonesia, covering all 105 commercial banks classified under the KBMI (Kelompok Bank Modal Inti) framework. Market structure is measured using the CR4 concentration ratio, conduct is proxied by credit growth across KBMI groups, and performance is assessed through Return on Assets (ROA). The findings reveal a persistently high level of concentration (average CR4 > 50%), indicating an oligopolistic structure dominated by four major banks. This structural dominance translates into strategic advantages for large banks, enabling them to maintain credit growth and profitability even during systemic shocks, such as the COVID-19 pandemic. Conversely, smaller banks exhibit heightened volatility in both credit distribution and ROA, reflecting limited capitalization, constrained funding access, and operational inefficiencies. The results affirm the core proposition of the SCP model: market structure significantly influences bank conduct and performance, reinforcing competitive asymmetries within the industry. Policy implications emphasize the need for regulatory interventions, including capital strengthening programs, liquidity support, and digital transformation incentives, to enhance the resilience and competitiveness of smaller banks. Keywords: Structure–Conduct–Performance, CR4, credit growth, ROA, Indonesian banking sector.