Abstract

Using the value added intellectual capital (VAIC) this study aims to investigate the impact of intellectual capital (IC) on the performance of Jordanian banks listed in the Amman Stock Exchange (ASE) during the years 2005-2018. Two empirical models were designed to test the effect of VAIC, and its three components including capital employed efficiency (CEE), human capital efficiency (HCE) and structural capital efficiency (SCE) on banking performance. The results of the study show that there is a significant and positive relationship between VAIC and banks profitability presented by return on assets (ROA). Meanwhile, when VAIC is split into components, SCE, CEE and HCE have a significant and positive impact on banks performance. Yet, CEE has more influence on performance compared to HCE and SCE. This study contributes to the literature as well as practitioners in financial institutions by providing evidence on the influence of intellectual capital on banks performance in an emerging economy, Jordan, in which its national vision and strategy emphasize the importance of intellectual capital in sustaining its economic growth.

Highlights

  • In recent years, the world economy has shifted toward knowledge-based economies (Dženopoljac, Janoševic, & Bontis, 2016)

  • The Model 1 which investigates the impact of the value added intellectual capital (VAIC), can explain 85.2% of unpredictability of banks profitability that is presented by return on assets (ROA), whereas the Model 2 suggested that the components of VAIC (HCE, structural capital efficiency (SCE) and capital employed efficiency (CEE)) can explain about 88.0% of variability of ROA

  • This study aims to test the influence of intellectual capital (IC) on the financial performance of Jordanian Banks listed in the Amman Stock Exchange during the years from

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Summary

Introduction

The world economy has shifted toward knowledge-based economies (Dženopoljac, Janoševic, & Bontis, 2016). The SC is identified as the knowledge that remains within the organization (Bontis, 1998)

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