INTELLECTUAL CAPITAL EFFICIENCY AND ITS CONTRIBUTION TO FINANCIAL STABILITY IN ISLAMIC BANKS: A STUDY OF THE GULF COUNTRIES

Intellectual capital efficiency and bank performance: Evidence from islamic banks

Intellectual Capital is essential in every economical activity. The aim of this study how intellectual capital impact on financial performance in Sri Lankan financial institution. To achieve objective of this research banking institution has been selected from Colombo Stock Exchange financial directory for the period from 2016 to 2020. Random sampling technique were used to analysis the data. MVIAC model used for the measurement of independent variable in this study. This model is a composite sum of two indicators these are Capital Employed Efficiency (CEE) - indicator of VA efficiency of capital employed and Intellectual Capital Efficiency (ICE) – indicator of value-added efficiency ofcompany’s Intellectual Capital base. Intellectual Capital Efficiency is composed of (a) Human Capital Efficiency (HCE) – indicator of value-added efficiency of human capital; and (b) Structural Capital Efficiency (SCE) – indicator of value-added efficiency of structural capital (c) Rational Capital Efficiency (RCE). Finding represent that intellectual capital has significant impact on financial performance of Sri Lankan financial institution, specially banking industry. SCE and CEE has negative impact while RCE impact positively on financial performance.

Purpose: The main purpose of this paper is to investigate the relationship between financial stability in Islamic banks and financial stability and soundness in conventional banks for five GCC countries.Design/methodology/approach: By using time series data, this study employs Pedroni’s panel cointegration to test the long-run relationship between financial stability of Islamic banks and financial stability of conventional banks in GCC countries during the period of (2000-2017). Besides, the study also employs Granger causality to test the causal link between stability of two types of banks (Islamic and Conventional). As well as employing Generalized Least Squares (GLS) to examine the effects between independent variables which are financial stability of conventional banks and their profitability, impact of period of financial crisis (2008/2009), oil prices fluctuations, banking concentration and financial sector development and financial stability of Islamic banks (as the dependent variable).Findings: The findings of this research suggest that there is a long-run, significant and positive relationship between the financial stability of conventional banks and its Islamic counterpart. At the same time, the financial stability of conventional banks is found to Granger caused the stability of Islamic banks.Originality/value: The results of the study contribute towards understanding the determinants of the financial stability of both Islamic banks and conventional banks and how they affect each other. This is important for policy ramifications by the Central Banks in GCC in terms of treating both types of banks differently to mitigate against future financial crises.

Financial stability is one of the drivers of economic growth, while Islamic banking currently dominates in global economic competition compared to other Islamic finance industry. Therefore, it is necessary to investigate the aspects that can affect the financial stability of Islamic banks. The purpose of this study is to analyze how capital structure, profitability, efficiency, and technology affect the financial stability (Z-Score) of Islamic banks in the ASEAN region. The study employs a panel data regretion. It utilizes documentation techniques such as the financial reports of each bank and other publicly available data. Sample selection is done through purposive sampling, resulting in a sample of 19 Islamic banks in ASEAN. The research concludes that capital structure significantly and positively influences stability, while efficiency has no impact on stability, and the financial soundness of ASEAN's Islamic banks is significantly impacted negatively by technology and profitability. Based on the findings of this research, the Islamic banks are required to pay more attention to the management of funds obtained from profitability as well as fund management for technology needs so as not to affect the financial stability of Islamic banks in ASEAN.

PurposeThis paper investigates the influence of intellectual capital (IC) efficiency and its components – human capital efficiency (HCE), structural capital efficiency (SCE) and capital employed efficiency (CEE) – on the growth paths of small and medium-sized enterprises (SMEs) and their likelihood of becoming high-growth firms (HGFs).Design/methodology/approachDrawing on the resource-based view (RBV), our study reveals a positive relationship between IC efficiency and the likelihood of becoming HGFs. Using a longitudinal dataset of 554,076 firm-year observations corresponding to approximately 79,158 European SMEs from 2012–2019, our study employs probit regression to examine the impact of IC efficiency on the probability of becoming an HGF. To investigate the impact of IC efficiency across the growth rate distribution, we conduct further analyses via generalized least squares.FindingsThe results show that IC efficiency positively influences the growth paths of small entrepreneurial ventures and their likelihood of experiencing high-growth episodes.Practical implicationsFor practitioners, the findings underscore the importance of investing in IC to enhance the growth process of entrepreneurial firms and increase their likelihood of achieving HGF status. Investments in IC can maximize growth potential and competitiveness, informing strategic decision-making.Social implicationsPolicymakers should consider the critical role of IC in promoting SME growth and formulate policies that encourage the development of IC among entrepreneurial firms. Such initiatives can stimulate economic growth, innovation and job creation across European economies.Originality/valueThis study contributes to the literature by focusing on entrepreneurial firms and examining how IC efficiency drives their transition to HGF status. This study provides empirical evidence across several European contexts over an extended period, emphasizing the role of IC efficiency in shaping the growth paths of entrepreneurial firms.

Intellectual capital efficiency measurement is a major problem facing managers of companies because of its intangible nature; thus, there is difference between book-value and market value of assets of the companies. Hence, this work investigated the intellectual capital (IC) efficiency on companies’ performance of 117 quoted firms in Nigeria between 2018 and 2019 periods using Pulic Value Added Intellectual Coefficient (VAIC) Model. Data were sourced through secondary means from audited annual reports of the sample. The data gathered were analysed with both Pearson correlation and regression analysis to test the study hypotheses. The results of the study revealed that there is positive significant relationship between Human Capital efficiency, Return on Equity and Return on Asset. The study further revealed positive and significant relationship between Structural Capital Efficiency, Return on Equity and Return on Asset. But out of three control variables only sector was significant with structural capital efficiency. The study concluded that intellectual capital efficiencies influence companies’ performance of the sampled companies. The study recommended that management of the sampled companies should give priority to policies that will improve employees’ capability and organizational structure.

The recent financial crisis has triggered a series of failures of many conventional banks and led to the rise of the interest in the Islamic banks. In this study, we seek to address the following question: What was the effect of the financial crisis and the political uncertainty on the financial stability of both Islamic and conventional banks? The conditional variance (volatility) of returns was used to measure financial stability. The various GARCH models were used to estimate volatility due to their ability to take into account the leverage effect; however they depend on the log likelihood results. The study covers a sample of 11 Islamic banks (IBs) and 17 conventional banks (CBs) for three major regions (the GCC, the Mediterranean and the MENA) for the period from (09/11/ 2005 to 09/ 12/2013). Our major findings are as follows. First, we document a significant increase in the volatility of conventional banks (CBs) during the period of the financial crisis whereas this crisis has had no significant effect on the volatility in Islamic banks (IBs). Second, the volatility of IBs has increased during the recent political turmoil and that of their conventional counterparts remain low in the Golf countries and the MENA region but more than in the Mediterranean region, this increase remained very moderate. In general, the findings are important for the understanding of the role of financial crisis and the Arab spring on the financial stability of IBs and CBs, suggesting that they are of great significance to investors.Keywords: Islamic banks; conventional banks; financial crisis; Arab spring; political uncertainty; financial stability

The main purpose of this study is to identify the impact of intellectual capital efficiency (ICE) also known as knowledge capital along with its components human capital efficiency (HCE) and structural capital efficiency (SCE) on bank risk-taking behavior in Bangladesh. To reveal this effect, the study uses generalized method of moment (GMM) estimator and Two Stages Least Square estimator (to check the Robustness) and unbalanced panel data of 32 commercial banks of Bangladesh consisting of 530 bank-year observations during the year 2003-2020. The main results of the study are: (a) ICE is significantly and positively connected with a bank’s credit risk which indicates credit risk grows up with the increase of Intellectual capital efficiency, and (b) Both the human capital efficiency and structural capital efficiency positively impacts credit risk but the impact of SCE is not significant as HCE, (c) Bank performance (ROA), RWATA, macro variable inflation, and size have a negative impact on bank risk whereas ID and GGDP insignificant positively impact on bank’s risk. Finally, the results of the study will assist the stakeholders, policymakers, and academicians for future research.

This paper examines whether Intellectual Capital (IC) efficiency is associated with Earnings Quality (EQ) for Jordanian-listed firms. Using the value-added intellectual coefficient and total accruals models to measure both IC and EQ, a positive and significant association was found between IC efficiency and EQ. Also found were a significant positive relationship between relational capital efficiency and EQ, a significant negative relationship between structural capital efficiency and EQ, and no relationship between human capital efficiency and EQ except in the real estate sector. Those results have implications for the competitive advantage of firms over rivals, corporate management decision-making, and the performance of the Jordanian capital market.

This paper re-examines the relationships between intellectual capital, financial performance and market value. The exogenous variables examined include human capital efficiency, structural capital efficiency (SCE) and capital employment efficiency - all used as proxies for intellectual capital (IC). Return on assets (ROA) and market value (MV) are the endogenous variables. The following are the main findings. First, intellectual capital (IC) as represented by human capital and capital efficiency significantly affects financial performance that represented by ROA over the long term, whereas IC as represented by structural capital cannot adapt to changes in the business environments. Second, SCE has failed to moderate the relationship between IC with ROA. Third, IC as represented by human capital, structural capital and capital efficiency significantly affects MV. Finally, SCE is being able to moderate the relationships between IC and MV.

This study examines how ownership structure affects the intellectual capital efficiency. It is conducted in an emerging market and uses data on Polish companies listed on the Warsaw Stock Exchange. We find that ownership by management board members negatively affects intellectual capital efficiency and especially structural capital efficiency. We also find the negative relationships between ownership by foreign investors and capital employed efficiency. Moreover, our study shows that the interactions between ownership structure and intellectual capital efficiency are different in high-tech and non-high-tech industries. This findings suggest that ownership structure plays a significant role in intellectual capital creation and efficiency.

The recent financial crisis has triggered a series of failures of many conventional banks and led to the rise of the interest in the Islamic banks. In this study, we seek to address the following question: What was the effect of the financial crisis and the political uncertainty on the financial stability of both Islamic and conventional banks? The conditional variance (volatility) of returns was used to measure financial stability. The various GARCH models were used to estimate volatility due to their ability to take into account the leverage effect; however they depend on the log likelihood results. The study covers a sample of 11 Islamic banks (IBs) and 17 conventional banks (CBs) for three major regions (the GCC, the Mediterranean and the MENA) for the period from (09/11/ 2005 to 09/12/2013). Our major findings are as follows. First, we document a significant increase in the volatility of conventional banks (CBs) during the period of the financial crisis whereas this crisis has had no significant effect on the volatility in Islamic banks (IBs). Second, the volatility of IBs has increased during the recent political turmoil and that of their conventional counterparts remain low in the Golf countries and the MENA region but more than in the Mediterranean region, this increase remained very moderate. In general, the findings are important for the understanding of the role of financial crisis and the Arab spring on the financial stability of IBs and CBs, suggesting that they are of great significance to investors.

The purpose of the present study is to investigate the relationship between intellectual capital (human capital efficiency, customer capital efficiency, and structural capital efficiency) and economic value added of the listed companies on the Tehran Stock Exchange (TSE). The population includes 39 firms selected through systematic sampling. The data is collected from the audited financial statements of the firms provided by TSE’s website from 2007 to 2010. The results of multiple linear regression analysis show that there is a significant relationship between financial performance of firms and intellectual value added, intellectual capital efficiency, relational capital efficiency, human capital efficiency, structural capital efficiency, and economic value added. However, the results of fuzzy regression analysis indicate significant relationships between the financial performance of firms and all the independent variables except structural capital efficiency and economic value added.

Despite the shift from industrial-based economy to knowledge-based economy, traditional accounting has continued to focus more on the physical assets in their financial statements to the exclusion of intangible asset. The main objective of this study therefore was to examine the effect of intellectual capital efficiency on cost of capital of manufacturing companies listed on the floor of the Nigerian Exchange Group from the period of 2014-2023. The research design adopted for the study was ex post facto, secondary data were used and the population of the study consisted of 62 listed manufacturing companies out of which a sample size of 27 was purposively selected. The data used in this study were analyzed using the Generalized Method of Moment (GMM) regression analysis. The findings of this study revealed that human capital efficiency (HCE), has a significant positive effect on the cost of equity; relational capital efficiency (RCE) has no significant effect on cost of equity; while structural capital efficiency (SCE) has no significant effect on cost of equity of listed manufacturing companies in Nigeria. Based on the above findings, it was concluded that intellectual capital efficiency can significantly impact on the cost of capital of listed manufacturing companies in Nigeria. It was therefore recommended among others that management of listed industrial goods companies should utilize advanced customer relationship management (CRM) systems to efficiently manage their interactions with customers and create competitive advantage.

PurposeThe purpose of this paper is to investigate the impact of intellectual capital (IC) efficiency on the banks’ risk-taking and stability of Asian emerging markets.Design/methodology/approachThis study uses a sample of 204 listed banks from 12 Asian emerging countries for the period 2010 to 2019. Data were analyzed using Ordinary Least Squares regression and checked for robustness using system generalized methods moment (GMM) estimation. The dependent variable of bank stability is measured using Z-score-based return on assets (ROA) and return on equity (ROE). The second dependent variable of bank risk is proxied by the standard deviation of ROA, ROE, non-performing loans and loan loss provision.FindingsThe results suggest the IC efficiency has no association with bank risk-taking and stability. The findings lend no support to the resource-based theory. The robustness of this result is confirmed by the system GMM estimation. However, support is found for the competition fragility view as high market power is associated with low risk-taking. The IC subcomponents, human capital efficiency (HCE) report a negative coefficient for bank risk-taking thereby having no support for the hypothesized relationships. Diversified banks with a higher deposit to total asset ratio resort to high risk-taking.Research limitations/implicationsIC efficiency does not have an impact on the bank’s risk-taking behavior and stability for Asian banks. Managers can use these findings to improve their IC and boost investor confidence. Regulatory authorities should increase its monitoring function of banks when the GDP decreases as risk-taking behavior are galvanized during this period.Originality/valueThis research is one of the first to provide empirical evidence of IC efficiency’s relationship with bank stability and bank risk-taking. The implications are useful for policymakers, managers and governing bodies to enhance the banks’ IC efficiency.