Abstract
The study examines the impact of intellectual capital on the financial
performance of banks in Pakistan. Data is obtained from annual
reports of banks. Value added Intellectual coefficient (VAIC) approach
is employed to analyze the efficiency of banks. ROA is used to measure
the financial performance of the banks. The intellectual capital (and its
components human capital and structural capital) of banks have been
analyzed and their impact on financial performance has been estimated
using multiple regression techniques. The VAIC value of conventional
banks is high as compare to Islamic banks. Human capital efficiency
(HCE) is the main driver of the intellectual capital performance of
banks operating in Pakistan. The findings show that VAIC is positively
associated with ROA while three components of VAIC showed mix
results on banks’ performance. This study could not take into account
different types of banks operating in Pakistan like foreign banks,
specialized banks and microfinance banks due to the limitation of the
data. Future study should therefore further improve on the aspect of
different types of banks. The VAIC approach may be useful for the
banks and policy makers in a knowledge economy to integrate the
intellectual capital in the decision making process. This is one of the
first studies in Pakistan that explores the impact of intellectual capital
on the financial performance of banks in Pakistan.
Muhammad Tahir, Syed Quaid Ali Shah, Muhammad Mumtaz Khan, Muhammad Asim Afridi. (2018) Intellectual Capital and Financial Performance of Banks in Pakistan, The Dialogue, Volume 13, Issue 1.
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