The role of intellectual capital in financial development: evidence from the banking sector of Turkey

Abstract

Purpose The objective of this study is to explore and compare intellectual capital (IC) and its three components in deposit, investment and participation banks operating in Turkey’s banking sector, and to analyze empirically the relationship between intellectual capital and financial performances of the banks. Design/methodology/approach The study uses a panel data of 46 banks operating in the Turkish banking system during the period of 2005–2019. To measure intellectual capital, value-added intellectual coefficient (VAIC) is used, consisting of the efficiency of a firm’s three types of capital – that is human, structural and employed capitals. To examine the proposed research hypotheses for each bank type separately, multiple regression analysis methods are used. Findings The findings of this paper reveal a positive and statistically significant relationship between IC and financial performance of the banks. Specifically, two of the components of IC, namely, employed and human capital efficiencies, are the most influential value drivers for the financial profitability of the banks, whereas structural capital efficiency has less importance in the profitability of the banks. The financial performance of the banks in Turkey is affected mostly by human capital. Therefore, if banks plan to increase their profitability, they need to pay more attention to human capital than structural and employed capitals. Originality/value The current study can be considered as one of the most comprehensive studies on analyzing the relationship between intellectual capital and financial performances of businesses in the Turkish banking sector. The previous studies analyzed either the banks individually or all banks as one group. The paper provides a valuable framework for executives, managers and policymakers in managing IC within the Turkish context as the most comprehensive study in the relevant literature.

Measuring national intellectual capital and its effect on country’s competitiveness

“…The resource-based view (Penrose, 1959; Barney, 1991) emphasizes that an organization’s competitive advantage is driven by its unique resources. In particular, in the era of the knowledge economy, intangible resources must be adequately managed so that they become a source of competitive advantage not only for enterprises but also for the country (Vo and Tran, 2021; Soewarno and Tjahjadi, 2020; Uslu, 2020). Intellectual capital, an intangible resource, plays a paramount role in an organization’s daily operations (Dalwai et al , 2021; Uslu, 2020).…”

“…In particular, in the era of the knowledge economy, intangible resources must be adequately managed so that they become a source of competitive advantage not only for enterprises but also for the country (Vo and Tran, 2021; Soewarno and Tjahjadi, 2020; Uslu, 2020). Intellectual capital, an intangible resource, plays a paramount role in an organization’s daily operations (Dalwai et al , 2021; Uslu, 2020). The intellectual capital theory has been mentioned in previous studies using various clarifications.…”

Impact of Intellectual Capital Efficiency on Growth Rate and Profitability of a Company: NASDAQ Baltic Case

“…al. (2020), Uslu (2020), Almutirat (2020) have shown the research gaps and opportunities for future research. Majority of the research are focusing on the profitability ratios, adjusting for value added and analysing current periods.…”

Value Drivers: Scientific Knowledge Advances and Research Avenues

“…'Intellectual capital' is a transversal theme, and 'assets' appears as a peripheral theme, and both are linked to the yellow cluster. On intellectual capital, Uslu (2020) suggests applying alternative techniques to VAIC to capture intellectual capital value drivers. Xu and Li (2019) encourage the analysis of long-term effects of intellectual capital and the inclusion of factors such as gross domestic product and price indices.…”