The Impact of Intellectual Capital on Financial Performance: A Study of Sri Lankan Financial Institution

Lecturers, Trincomalee Campus, Eastern University, Sri Lanka ,A. Nishanthini

doi:10.47191/ijmra/v4-i9-21

Lecturers, Trincomalee Campus, Eastern University, Sri Lanka , A. Nishanthini

Open Access

https://doi.org/10.47191/ijmra/v4-i9-21

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Abstract

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.

Highlights

Intellectual Capital is essential in every economical activity
In the new economic system, which is popularly known as the knowledge economy, intangible or intellectual assets have eventually recognized as the prominent resources
Therefor this study will attempt to demonstrate the impact of the disclosure of intellectual capital on Financial Performance in Sri lankan Financial Institution specially in Banking Sector

Summary

Introduction

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. Therefor this study will attempt to demonstrate the impact of the disclosure of intellectual capital (human capital, structural capital, and Relational capital) on Financial Performance in Sri lankan Financial Institution specially in Banking Sector.

Objectives

Results

Conclusion