Impact of intellectual capital on bank efficiency in emerging markets: evidence from Ghana

Onumah, Joseph Mensah; Duho, King Carl Tornam

doi:10.1504/ijbaaf.2020.110303

Cited by 20 publications

(25 citation statements)

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“…In a similar vein, HCE also acts as an essential contributor to bank efficiency. This aligns with the findings of Vidyarthi (2019), Onumah and Duho (2020), and Le et al. (2022), who demonstrated that human capital positively contributes to banks' efficiency in different emerging markets.…”

Section: Resultssupporting

confidence: 91%

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Does intellectual capital influence banks' efficiency? Evidence from India using panel data tobit model

Maji,

Saha

2023

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PurposeThis study investigates the effect of intellectual capital (IC) and its components on the technical efficiency of Indian commercial banks after controlling the influence of bank-specific and macroeconomic variables.Design/methodology/approachThe study selects a sample of 37 listed Indian commercial banks from 2005 to 2019 and uses the two-step data envelopment analysis (DEA) approach. Banks' technical efficiency scores are first estimated, while the relationship between IC and technical efficiency is examined in the second stage using the panel data Tobit model.FindingsThis study's findings suggest a fluctuating trend in the technical efficiency of Indian banks. Notably, from 2015 onwards, a declining technical efficiency trend is observed for all banks. However, private-sector banks outperform public-sector banks in terms of technical efficiency. This study's regression analysis indicates a positive relationship between IC and banks' technical efficiency scores. Further, by decomposing IC into its components like human capital, structural capital and capital employed, the study's findings show that human capital and structural capital enhance banks' technical efficiency. Notably, capital employed reduces technical efficiency. Moreover, bank size, diversification, capitalization, net interest margin and the country's growth rate significantly drive Indian banks' efficiency. In contrast, their operating cost ratio and the country's inflation negatively influence the same.Originality/valueThis study makes a novel endeavor to examine the IC and bank's technical efficiency nexus in the Indian context, encompassing a period of landmark banking reforms.

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Section: Resultssupporting

confidence: 91%

“…This finding supports the assertion of the RBV theory that IC plays a critical role in bank performance. This finding is parallel with those of Vidyarthi (2019), Onumah and Duho, 2020, and Le et al. (2022) in the emerging markets context.…”

Section: Resultssupporting

confidence: 76%

Does intellectual capital influence banks' efficiency? Evidence from India using panel data tobit model

Maji,

Saha

2023

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“…This is very interesting as we continue to find foreigners investing within the economies of Ghana, Nigeria and Cote D'Ivoire. The inflow of FDI positively affects different aspects of the economy, which yields positive results and business successes [84]. The study also reveals that economic growth as measured by GDP growth drives the performance of firms [19,20,34].…”

Section: Ic Intangibles and Performance Of Firms-composite Metricsmentioning

confidence: 80%

“…The regression technique utilized in this case is the panel-corrected standard error regression, which addresses the weaknesses of the ordinary least squares regression. Previous studies have used the panel-corrected standard error regression and have favoured it above the use of the fixed effect, random effect or have found the results consistent with that of the system generalized method of moments [4][5][6]84].…”

Section: Econometric Modelmentioning

confidence: 99%

Intangibles, Intellectual Capital, and the Performance of Listed Non-Financial Services Firms in West Africa: A Cross-Country Analysis

Duho

2022

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This study aims to examine the impact of intellectual capital and intangible value on the performance of listed non-financial firms in West Africa. The study used the Value Added Intellectual Coefficient (VAIC™) to measure intellectual capital performance (with components as ICE—Intellectual Capital Efficiency an additive measure of the next two metrics, HCE—Human Capital Efficiency, SCE—Structural Capital Efficiency and CEE—Capital Employed Efficiency), financial ratios to measure intangible value and return on assets to measure performance while controlling for firm-level and macroeconomic variables. Using the panel-corrected standard error regression on 59 firms operating from 2007 to 2018, the study found that VAIC, ICE, HCE and SCE measures of intellectual capital are the pièce de résistance that drive the performance of firms. It is found that the relationship is curvilinear taking the shape of an inverted U. CEE does not drive the performance of firms, and asset tangibility inhibits performance but the investment in intangible fixed assets has a positive insignificant effect on performance. Firm size has a positive impact while financial leverage has a negative impact on performance. Human development does not drive performance but foreign direct investment and economic development do. There are country-specific insights where in Ghana intellectual capital and intangible value have a very strong positive effect on performance, followed by a relatively high impact in Cote D’Ivoire while there is a weak effect in the Nigerian context. The study also explores the effect of other variables such as firm size, financial leverage, human development, foreign direct investment and economic development. The findings are useful for policy, accounting, finance, economic and human resource practitioners as well as, for the academic community.

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“…This study measures the firm size using the natural logarithm of total assets in line with earlier studies (Onumah and Duho, 2020; Kyereboah-Coleman, 2007; Hermes and Hudon, 2018; Lassoued, 2017). It is expected that larger firms would be better positioned to manage their credit risk and market risks effectively.…”

Section: Methodsmentioning

confidence: 99%

Impact of income diversification strategy on credit risk and market risk among microfinance institutions

Duho

Forson

2021

JEAS

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PurposeThis study explores the effect of income diversification strategy on credit risk and market risk of microfinance institutions (MFIs) in Ghana as an emerging market.Design/methodology/approachThe study is based on quarterly data of averagely 271 MFIs that have operated from 2016 to 2018. The dataset is unbalanced and pooled cross-sectional with 3,259 data points. The study measures the diversification strategy using income diversification indices, and accounting ratios to measure the other variables. We utilised the weighted least squares (WLS) approach to explore the nexus.FindingsThe findings show that income diversification is associated with better loan quality and credit risk management. Market risk increases with the level of income diversification of microfinance firms. It is evident that large MFIs can manage their credit risks well and can have a low default rate, depicting an overall U-shaped nexus. On the other hand, the effect of size on market risk is an inverted U-shaped. The effect of asset tangibility on credit risk is positively significant while the effect on market risk is negatively significant. High profitability enhances credit risk management leading to lower loan losses while in the case of diversified and profitable MFIs, they tend to invest more in government securities. The results suggest that MFIs that hold more cash and cash equivalents tend to have high loan loss provision and more government securities suggesting much attention should be paid to optimal cash management.Practical implicationsThe results throw light on the credit risk and market risk profile of the firms and the effect of diversification strategies on them. The findings are relevant for effective macroprudential regulation, market regulation and prudential regulation of the microfinance sector.Social implicationsThe findings reveal the nature of income diversification strategy of MFIs in emerging markets such as Ghana, pointing out how they affect the risk exposure of MFIs that lend to the pro-poor population.Originality/valueThis is a premier formal assessment of the nexus between income diversification strategies and risk management among MFIs that serve the pro-poor population in the emerging market context.

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Impact of intellectual capital on bank efficiency in emerging markets: evidence from Ghana

Cited by 20 publications

References 0 publications

Does intellectual capital influence banks' efficiency? Evidence from India using panel data tobit model

Does intellectual capital influence banks' efficiency? Evidence from India using panel data tobit model

Intangibles, Intellectual Capital, and the Performance of Listed Non-Financial Services Firms in West Africa: A Cross-Country Analysis

Impact of income diversification strategy on credit risk and market risk among microfinance institutions

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