Analysis of Strategic Group of State-Owned Banks VS Private-Owned Banks: Application of Game Theory

Abstract

The two largest strategic groups of Indonesia Banking show an intense competition recently. While BCA is the largest market capitalization in Indonesian stock market, state-owned banks should set the appropriate strategies to capture larger market. The aim of this study is to analyze the strategies from the banking strategic groups in Indonesia, particularly strategy in improving the third party funds and total credit, and in which state-owned banks is proxied by BRI, and private-owned banks is represented by BCA. The method applied in this study is by implementing game theory approach to identify the best strategies based on other players’ movement. The findings suggest that Pure Strategy Nash Equilibrium 1 of Game 1 is to increase the deposit segment for each bank and Pure Strategy Nash Equilibrium 2 in Game 2 suggests to focus more on increasing credits on the sector of micro business.