The Intellectual Capital Performance of KuwaitiBanks: An Application of vaicTM1 Model

Fayez Abdulsalam,Ridha Al-Khayyat,Hameed Al-Qaheri

doi:10.4236/ib.2011.31014

Abstract

The paper uses the Value Added Intellectual Coefficient VAICTM model, a widely used model, to measure the Intellectual Capital efficiency of the Kuwaiti Banks using a ten years period data set from 1996 to 2006. Three value efficiency indicators, Human Capital Efficiency (HCE), Capital Employed Efficiency (CEE) and VAICTM, where used in the analysis. The data set was divided into commercial and no-commercial banks. The non commercial banks were outperformed by almost all the commercial banks in the last 3 years; 2004-2006. The results of the rankings of the banks for the last year (2006) showed that for VAICTM the top two performers in the study were The Commercial Bank of Kuwait followed by the Gulf bank while the worst performer was Kuwait Real Estate Bank. And the results of ranking based on Human Capital Efficiency (HCE), showed similar results as that of VAICTM. However, the ranking results based on Capital Employed Efficiency (CEE) showed the top two performers to be National Bank of Kuwait followed by the Gulf Bank and the worst performer was still the Kuwait Real Estate Bank

Highlights

Despite the fact that intangible assets, such as knowledge assets and customer relations, are the driving force behind business success in today’s knowledge economy and global, dynamic and complex business environment, measuring the efficiency of these assets remains a challenge at both macro and micro level of economy
The results of ranking based on Human Capital Efficiency (HCE), showed similar results as that of VAICTM
Human Capital Efficiency (HCE): an indicator which shows how much Value added (VA) is created on each monetary unit invested in HC

Summary

Introduction

Despite the fact that intangible assets, such as knowledge assets and customer relations, are the driving force behind business success in today’s knowledge economy and global, dynamic and complex business environment, measuring the efficiency of these assets (the Intellectual Capital ) remains a challenge at both macro and micro level of economy. It is a challenge for government which are or becoming less efficient, for corporations which have no reliable indicators for their business success and for the employees who are unaware of their significant role in the value creation process [1]. VAICTM indicates to business mangers and to policy makers how iB

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