Abstract
This study empirically presents evidence of nonlinearity and heterogeneity relation between intellectual capital and risk-taking for the Vietnamese banking system. We used quantile regression methods on a data set of 30 Vietnamese banks from 2007 to 2019. The results showed that bank insolvency was positively affected by its value-added intellectual coefficient (VAIC) at the upper quantiles (i.e., 80th and 90th), while the opposite was true for credit risk (i.e., 10th and 20th quantiles). When observing the VAIC’s components, risk-taking behaviors were also significantly affected by HCE (Human Capital Efficiency), CEE (Capital Employed Efficiency) and SCE (Structural Capital Efficiency) at the 90th quantile of instability distribution and the 10th quantile of credit risk distribution. Furthermore, the results also emphasized that there was an inverse U-shaped association between intellectual capital and bank risk-taking. Therefore, this study provides important implications for policymakers, regulators, bank managers and academics that encourage increasing investment in knowledge assets to minimize bank risks in the long run.
Highlights
Since the late 20th century, Intellectual Capital (IC) has been received much attention from academics and practitioners because it is recognized as the hidden factors behind the significant gap between a firm’s market value and its book value (Lev 2001)
We focus on the literature on the relationship between intellectual capital and bank risk-taking where IC is measured by the value-added intellectual coefficient (VAIC) method, proposed by Pulic (2004)
As the previous traditional regressions have not strongly explained the impacts of IC on bank insolvency though they can provide a good estimation of the bank credit risk
Summary
Since the late 20th century, Intellectual Capital (IC) has been received much attention from academics and practitioners because it is recognized as the hidden factors behind the significant gap between a firm’s market value and its book value (Lev 2001). Despite no universal concept of IC, its definition still contains some common keywords, as accumulated knowledge, gained experience, intangible assets, maintaining good relationships, know-how and innovation, which help firms gain more sustainable competitive advantages and enhance their market value (Clarke et al 2011). Several studies have attempted to define IC from a theoretical perspective (Bontis 1998; Wu and Tsai 2005), while other have developed effective measures of IC-based performance (Pulic 2000) or explored the relationship between IC efficiency and some key characteristics of firms, industries and regions (El-Bannany 2008; Liang et al 2011). The last common strand focuses on the effect of IC efficiency on financial performance, especially in the banking industry. Some studies confirm that banks should manage their IC as efficiently as possible because of its significant effects (Ozkan et al 2017). To the best of our knowledge, very few studies attempt to investigate the impact of IC on bank risk-taking
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