Abstract
This paper uses the value-added intellectual coefficient (VAIC) to assess the performance of Islamic banks (IBs) by measuring return on assets (ROA) and income from financing Islamic banks (IFIB). The model tests the relationship between intellectual capital (IC) and IB performance in various regions using a panel data regression methodology with a fixed-effects model and IB financial data for the period 2009–2019 from the BankScope database. The empirical results show that VAIC has a significant positive effect on IB performance using both ROA and IFIB proxies. Furthermore, human capital and capital employed efficiency have a positive relationship with ROA and IFIB, while structural capital efficiency has a relationship with ROA, but is not related to IFIB. The results can be used by companies in strategic decision making related to IC, especially human capital, structural capital, and employed capital.
Highlights
Resource theory claims that the composition of tangible and intangible resources managed by a company is the main factor in its performance
The average HC efficiency (HCE) score reached 3.02925, which is much higher than the average structural capital efficiency (SCE) and CE efficiency (CEE) scores of 0.64156 and 0.10095, respectively
The observations pertaining to performance show that overall, the performance of Islamic banks (IBs) is positive in terms of return on assets (ROA) and income from financing Islamic banks (IFIB) with an average score of 3.51144 and 3.55915
Summary
Resource theory claims that the composition of tangible and intangible resources managed by a company is the main factor in its performance. According to Scafarto et al (2016), intellectual capital (IC) and human capital (HC) are essential to running a business. A company must have strategic resources in the form of IC (Hsu and Wang 2012). The development of information technology and science has triggered interest in IC research (Guthrie et al 2001). IC is an instrument that can affect company performance (Edvinsson and Malone 1997). Companies need to create new knowledge to secure their future and must have a good strategy and good resource management (Nonaka et al 2017)
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