Measuring intellectual capital performance of Indian banks

Singh, Sukhdev; Sidhu, Jasvinder; Joshi, Mahesh; Kansal, Monika

doi:10.1108/mf-08-2014-0211

Cited by 66 publications

(86 citation statements)

References 37 publications

(41 reference statements)

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“…Using the large data set of 111 Pakistani financial institutions, the fixed effect and GMM regressions were applied to offer a robust relationship between IC and sustainable performance. The results reported the positive impact of IC on performance, which is consistent with many previous studies [18,27,28,30,36,37,[39][40][41]43,58,69,71,77], and also affirmed an inverted U-shaped relationship between IC and performance. This inverted U-shaped relationship is consistent with Haris, Yao, Tariq, Malik and Javaid [4] and our proposed hypothesis H 1 that financial institutions in Pakistan are capable, up to a certain level, of generating value and sustaining competitive advantage through their IC and financial capital resources.…”

Section: Discussionsupporting

confidence: 91%

“…IC has been classified into different components and measured by different methodologies [11,13,14,16,[22][23][24][25]. However, the advanced one, i.e., value-added intellectual coefficient (VAIC), developed by Pulic [24], is used in this study as a measurement of IC.Many studies have provided evidence regarding the relationship between IC and performance in different countries [4,18,[26][27][28][29][30][31][32][33][34][35][36][37][38][39][40][41][42][43][44]. However, evidence from financial institutions is still scarce.…”

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confidence: 99%

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Intellectual Capital, Profitability, and Productivity: Evidence from Pakistani Financial Institutions

et al. 2019

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The idiosyncratic and knowledge-intense nature of the financial institutions requires them to rely more on intangible than on tangible resources. Over the past two decades, researchers have been motivated to embark on the relationship between intellectual capital (IC) and performance of financial institutions. Considering the knowledge-based intellect as a critical skill of this era, the current study examines the impact of IC on the performance of 111 Pakistani financial institutions (PFIs) over the period 2007-2018. Two IC measures, i.e., value-added intellectual coefficient (VAIC) and modified value-added intellectual coefficient (MVAIC), were applied to examine the impact of IC on profitability and productivity. Robust results from the fixed effect regression and generalized method of momentum affirm the inverted U-shaped relationship between IC and performance, suggesting that the increase in IC performance of PFIs increases their profitability and productivity up to a certain level, and after that, a further increase in IC performance decreases profitability and productivity. The results further suggest that human capital is the most influencing intellectual resource which produces higher intellectual efficiencies and increases the performance significantly. The results of this study are likely to be helpful for management, regulators, policy makers, and academics and provide insights into the importance of IC and suggest that the investment in the IC improves the sustainable performance to a certain extent.Sustainability 2019, 11, 3842 2 of 30 (IC) was first published in 1969 by John Kenneth Galbraith [8]; since then, the development and the existence of IC have been considered significant to the performance and sustainability of FIs [9].Modern FIs operate in a more challenging and dynamic environment due to technological advancement, continuous innovation in systems and processes, fast-changing customer preferences, and intense competition [10]. Unlike the nonfinancial sector, the operational success, growth, and sustainability of the financial sector do not rely more on tangible assets. As the financial sector provides a range of diversified financial services, therefore, it relies more on IC elements which are intangible in nature, like advanced systems, processes, skills, expertise, supportive culture, environment, knowledge, and information [4]. IC is believed to be a key force to value creation, hidden behind the book value of institutions [11,12]. In order to understand the concept of IC, it can be explained as the combination of structure capital and human capital [11,13]. Structure capital is based on customer and organization capital. Customer capital refers to potential intangibles such as knowledge embedded in suppliers, customers, related industry associations or the government [13]. Organization capital refers to intangibles such as knowledge embedded within the routines of an institution, systems and processes, supportive culture, information systems, transaction times, and procedural innova...

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Section: Discussionsupporting

confidence: 91%

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Intellectual Capital, Profitability, and Productivity: Evidence from Pakistani Financial Institutions

et al. 2019

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“…There were many firms and researchers determined that the intellectual capital became important assets and components for the measurement of financial performances. These countries had been developed the application of intellectual capital in banking sector such as in Australia (Pulic and Bornemann, 1999); Japan (Mavridis, 2004); Malaysia (Goh, 2005);UK (El-Bannany, 2008), Hong Kong (Chan, 2009a(Chan, , 2009b and India (Singh, & Joshi, 2016).…”

Section: The Intellectual Capital and Financial Performances In Bankimentioning

confidence: 99%

“…Similarly, Kayacan and Ozkan (2015) examined the relationship on intellectual capital performance of the participation banks operated in Turkey towards the financial performances in terms of profitability ratio. Moreover, the study indicated based on the 20 banks in India whereby consists of 10 public and 10 private sector banks within the year from 2007 to 2011 (Singh et al, 2016). The last but not least, Thakur (2017) conducted the analysis on effects of intellectual capital and the financial performances of public and private sector banks in India over the period 2013 to 2015.…”

Section: The Intellectual Capital and Financial Performances In Bankimentioning

confidence: 99%

On intellectual capital and financial performances of banks in Malaysia

Poh

Kılıçman

Ibrahim

2018

Cogent Economics & Finance

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The purpose of the study is to consider and measure the intellectual capital towards the financial performances of the local banks in Malaysia. The study will implement the Value Added Intellectual Coefficient (VAIC) method to evaluate the financial performances of the ten local banks in Malaysia. The study will determine how the intellectual capital influences the financial performances of banks in terms of two periods which are latest six years from 2011 to 2016 and the past ten years from 2007 to 2016. The regression analysis results to indicate that the components of intellectual capital have their influences towards the bank's financial performances indicators. Over the six years and ten years periods, Capital Employed Efficiency has the significant relationship on Return on Assets. For the Return on Equity, Human Capital Efficiency (HCE) has the significant relationship over the latest six years while Structural Capital Efficiency (SCE) has the significant relationship over the ten years. Then, SCE has the significant relationship towards the Leverage (LEV) for the latest six years compare to the past ten years whereby HCE has the significant relationship towards the LEV. These results determine that the banks need to focus on the three components of intellectual capital whereby all the three efficiencies have the influences to enhance the best financial performances in Malaysia's banking sector.

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“…Weqar & Haque (2020) found that the IC of Indian CPSEs only help in enhancing its productivity, while human capital is the strongest predictor in augmenting the financial performance of the Indian CPSEs. Another study on the Indian banking industry by Singh et al (2016) found that its efficiency of IC significantly and positively influences the profitability of the Indian banks. The study on the Indian banks was also conducted by the Mondal & Ghosh (2012), and they found that both profitability and productivity is substantially and positively affected by the intellectual capital efficiency whereas ROE was not strongly influenced by the IC.…”

Section: Ic and Organisational Financial Performancementioning

confidence: 99%

Does Intellectual Capital Predict the Financial Performance of the Indian Textile Industry

Weqar¹,

Haque²

2020

IJAR

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The success and prosperity of technologically advanced and knowledge-based business organisations of the world have bowed the attention of the researchers and academicians from tangible to intangible assets/capital. The intangible assets of the organisation embrace the knowledge, experience, talent, attitude, innovation, creativity, problem-solving ability, strong and healthy relationship with the stakeholders, systems, databases, patents, intellectual property, etc. These intangible assets are known as intellectual capital (IC). The conventional measure of financial performance is not compatible for the stakeholders, as it fails to capture and measure IC, making them illinformed regarding the factual position of the business organisation (Bontis, 2001; Joshi et al., 2013; Mehralian et al., 2012). IC can be employed as a tool to generate the value and augment the wealth of the organisation by improving the productivity of the employees and gain competitive advantage (Edvinsson & Malone, 1997; Pulic, 1998; Stewart, 1997). Thus a direct influence of IC on the financial performance of the firm is anticipated (Ramandeep & Narwal, 2016). Additionally, IC is vital for the success of all types of industries, be it an agriculture, manufacturing or service industry. The difference is only based on the grade of involvement; several industries are high labour and capital intensive, while others are highly knowledge-intensive (Tiwari & Vidyarthi, 2018). Researcher across the world, have explored the effect of IC in the process of value-creation and enhancement of the financial performance of the firm like Scafarto et al.

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Measuring intellectual capital performance of Indian banks

Cited by 66 publications

References 37 publications

Intellectual Capital, Profitability, and Productivity: Evidence from Pakistani Financial Institutions

Intellectual Capital, Profitability, and Productivity: Evidence from Pakistani Financial Institutions

On intellectual capital and financial performances of banks in Malaysia

Does Intellectual Capital Predict the Financial Performance of the Indian Textile Industry

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