Abstract
PurposeIntellectual capital (IC) and financial performance is now a very contemporary issue in the banking sector. The purpose of this study is to investigate empirically the impact of IC on financial performance of all the listed commercial banks of Bangladesh.Design/methodology/approachBangladesh Bank database and financial statement of the listed commercial banks of Bangladesh for the period of 2014–2018 have been used to collect data. Value added intellectual coefficient (VAICTM) methods have been used for measuring the performance of banks. VAICTMdetermined IC and its three major components like structural, human and capital employed.FindingsThe results suggest that human capital efficiency (HCE) and capital employed efficiency (CEE) have statistically significant relationships with bank performance, but when VAICTMis divided then structural capital efficiency (SCE) does not have a significant relationship with bank performance.Research limitations/implicationsThe study uses only listed banks, but it does not include all the commercial banks specially nationalized commercial banks.Practical implicationsThe findings allowed banks to focus more on human capital (HC) and structural capital, because in the present world, HC is considered one of the key factors for the success in business. This study also provides an awareness on how good IC of the banking companies will bring more assistance to a better life of a society.Originality/valueThis is one of the very few studies which examine the impact of IC on bank financial performance in Bangladesh.
Highlights
Knowledge and technological advancement are escalating globally in the last couple of decades
**Correlation is significant at the 0.01 level Note(s): ROA 5 return on assets; ROE 5 return on equity; RG 5 revenue growth; VAICTM 5 value added intellectual capital; SCE 5 structural capital efficiency; HCE 5 human capital efficiency; CEE 5 capital employed efficiency
IC has become the key resources of value creation especially in the banking sector which is discussed by a plethora of research studies, but the present study reveals that CEE has a great significant role for the financial performance of banks rather than structural and HC
Summary
Knowledge and technological advancement are escalating globally in the last couple of decades. Using VAICTM method, there are several research studies which have been studied to find the association between IC and financial performance based on accounting and market in developed and developing countries, especially banking sector and produced mixed results, such as Xu and Liu (2020) in China; Soewarno and Tjahjadi (2020) in Indonesia; Bayraktaroglu et al (2019) in Turkey; Kweh et al (2019) in Malaysian; Mehralian et al (2012) in Iran; Chu et al (2011) in Hong Kong; Ismail and Karem (2011) in Bahrain and Maditinos et al (2011) in Greece and Wang (2011) in Taiwan. Mondal and Ghosh (2012) who conducted research based 65 Indian banks for the period of 1999–2008, to examine empirically the association between IC and financial performance.
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