Does intellectual capital affect bank performance? Evidence from Bangladesh

Abstract

Purpose – This paper attempts to evaluate the impact of intellectual capital on bank performance in Bangladesh. Design/methodology/approach – The authors analyze an unbalanced longitudinal data of 32 banks, which cover 318 observations of bank-year from 2010 to 2019. The study employs a dynamic panel model with the two-step system generalized methods of moments (SGMM). Findings – The results show that bank performance is significantly positively affected by the intellectual capital (IC) in Bangladesh. In addition, the findings show that capital employed efficiency (CEE) is an essential determinant of bank performance rather than structural capital efficiency (SCE) and human capital efficiency (HCE) for the Bangladeshi banking sector. Originality/value – This work is unique as no one has explored the impact of intellectual capital on Bangladesh's bank performance. The findings suggest that business owners, managers and policymakers who want to improve the efficiency of their organizations should spend continuously on IC and expand their investment into CEE, which includes both financial and physical resources, in order to obtain better bank performance.

Keywords

• Intellectual capital
• VAIC
• Performance
• Dynamic panel model
• SGMM