THE EFFECT OF MARKET COMPETITION ON THE FIRM’S PROFITABILITY RATE: EMPIRICAL EVIDENCE FROM THE CONVENTIONAL COMMERCIAL BANKS IN INDONESIA 2017 – 2021.

Bank profitability matters for financial performance. The first line of defense against losses from credit impairment is profitability. The profitability of the banking industry is the most crucial financial system instrument for the economy's future. Market structure is an external factor influencing bank profitability since it pertains to banks' market power in regulating interest rates. The structure of the banking market is important for the efficiency of production of financial services, the quality of financial products, and the level of financial innovation. Competition between banks can occur because of competition in seizing productive resources such as deposits, savings, and lending. Competition in the banking sector, like in other sectors of the economy, has implications for efficiency, innovation, pricing, availability of choice, consumer welfare, and the allocation of resources in the economy. The ten largest banks in Indonesia controlled about 70% of the market share in 2021. This suggests that Indonesia's market structure can be categorized as an oligopoly market. This research consists of empirical studies done on conventional banking listed on the IDX between 2017 and 2021. Fixed Effect Model Within is used to analyze this research model. This research method is quantitative, with a focus on quantity and the usage of secondary data for research. Market Structure has a negative and significant effect on bank’s profitability. Competition variable has a positive and significant effect on bank’s profitability. Size has no effect on the bank’s profitability. This is caused by the volatility in small caps are not showing the high of volatility level, the data showed that the volatility in small caps tend to be stable. The bid-ask spread variable has no effect on the Disposition Effect variable because the bid-ask spread in small caps showed that the bid ask spread are all in negative value and no data showed the high difference in between.