The impact of the intellectual capital efficiency on commercial banks performance: Evidence from the US

Using a large sample of 5,749 commercial banks, covering over 40,000 observations over the time window 2005–2012, we find that efficiency in the use of intellectual capital (IC) positively affects the financial performance of US banks. In addition, the results show that human capital (HC) efficiency, a subcomponent of IC efficiency, has a larger impact on financial performance than other IC sub-components. These findings suggest that the development of effective techniques of knowledge management, enabling banks to accumulate the IC necessary to adapt to a constantly changing environment, represents an effective tool of achieving the goals of both bank managers and policymakers.

[1]  L. Vogt.  Intellectual Capital The New Wealth Of Organizations , 2016 .

[2]  Karl-Erik Sveiby.  The New Organizational Wealth: Managing and Measuring Knowledge-Based Assets , 1997 .

[3]  Y. Hwang,et al.  An Empirical Investigation of the Relationship between Intellectual Capital and Firms’ Market Value and Financial Performance , 2005 .

[4]  Irene Wei Kiong Ting,et al.  Intellectual capital performance of financial institutions in Malaysia , 2009 .

[5]  K. Gan,et al.  Intellectual Capital and Corporate Performance of Technology-Intensive Companies: Malaysia Evidence , 2008 .

[6]  Chiung-Ju Liang,et al.  Does ownership structure affect firm value? Intellectual capital across industries perspective , 2011 .

[7]  G. Kamath.  The intellectual capital performance of the Indian banking sector , 2007 .

[8]  Wann-Yih Wu,et al.  Impact of social capital and business operation mode on intellectual capital and knowledge management , 2005, Int. J. Technol. Manag..

[9]  N. Bontis,et al.  The Financial Crisis of Banks (Before, During and After): An Intellectual Capital Perspective , 2014 .

[10]  Emma García‐Meca,et al.  Assessing the quality of disclosure on intangibles in the Spanish capital market , 2005 .

[11]  N. Brennan,et al.  Reporting Intellectual Capital in Annual Reports: Evidence from Ireland , 2001 .

[12]  H. Huizinga,et al.  Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence , 1999 .

[13]  Guy S. Liu,et al.  Does market structure matter on banks’ profitability and stability? Emerging vs. advanced economies , 2013 .

[14]  K. Pal,et al.  IC performance of Indian pharmaceutical and textile industry , 2012 .

[15]  Robin Fincham,et al.  Intellectual capital accounting in the UK: A field study perspective , 2004 .

[16]  Angelo Ditillo,et al.  Intellectual Capital ‐ Navigating in the New Business Landscape , 1998 .

[17]  J. Barney.  Firm Resources and Sustained Competitive Advantage , 1991 .

[18]  J. Hulland,et al.  Managing An Organizational Learning System By Aligning Stocks and Flows , 2002 .

[19]  Manfred Bornemann.  Potential of value systems according to the VAIC™ method , 1999 .

[20]  Mahfoudh Abdul Karem Al-Musalli,et al.  Intellectual Capital Performance and Board Characteristics of GCC Banks , 2012 .

[21]  Gabriele Sampagnaro,et al.  Monitoring in Small Business Lending: How to Observe the Unobservable , 2015 .

[22]  M. Malone,et al.  Intellectual Capital: Realizing Your Company's True Value by Finding Its Hidden Brainpower , 1997 .

[23]  R. Petty,et al.  INTELLECTUAL CAPITAL LITERATURE REVIEW: MEASUREMENT, REPORTING AND MANAGEMENT , 2000 .

[24]  Markus Schmid,et al.  Risk Management, Corporate Governance, and Bank Performance in the Financial Crisis , 2011 .

[25]  Ante Pulic,et al.  VAIC™ - an accounting tool for IC management , 2002, Int. J. Technol. Manag..

[26]  Nick Bontis,et al.  Intellectual capital and performance within the banking sector of Luxembourg and Belgium , 2013 .

[27]  Abdullah Yalama,et al.  Intellectual capital performance of quoted banks on the Istanbul stock exchange market , 2007 .

[28]  Intellectual Capital and business performance. Evidence from Italian banking industry , 2009 .

[29]  Pek Chen Goh.  Intellectual capital performance of commercial banks in Malaysia , 2005 .

[30]  Maria do Rosário Cabrita,et al.  Intellectual Capital and Value Creation : Evidence from the Portuguese Banking Industry , 2005 .

[31]  R. V. Vennet,et al.  Business models and bank performance: a long-term perspective , 2016 .

[32]  G. Iazzolino,et al.  Value Added Intellectual Coefficient (VAIC) , 2013, Research Handbook on Intellectual Capital and Business.

[33]  S. Veltri,et al.  Direct and Indirect Effects of Human Capital on Firm Value: Evidence from Italian Companies , 2011 .

[34]  Allen N. Berger,et al.  How Does Capital Affect Bank Performance During Financial Crises? , 2012 .

[35]  Martin Clarke,et al.  Intellectual capital and firm performance in Australia , 2011 .

[36]  S.Carbó Valverde,et al.  The determinants of bank margins in European banking. , 2007 .

[37]  Hiroyuki Itami.  Mobilizing invisible assets , 1987 .

[38]  H. Håkansson,et al.  Developing relationships in business networks , 1995 .

[39]  P. O. Pablos.  Intellectual capital reporting in Spain: a comparative view , 2003 .

[40]  Steven Firer,et al.  Intellectual capital and traditional measures of corporate performance , 2003 .

[41]  N. Bontis,et al.  Intellectual Capital and Financial Performance in Serbia , 2013 .

[42]  Magdi El-Bannany.  A study of determinants of intellectual capital performance in banks: the UK case , 2008 .

[43]  S. Ongena,et al.  Distance, Lending Relationships and Competition , 2002 .

[44]  N. Bontis.  Intellectual capital: an exploratory study that develops measures and models , 1998 .

[45]  William S. Chang,et al.  Intellectual Capital and Value Creation- Is Innovation Capital a Missing Link? , 2011 .

[46]  Arnoud Boot.  Relationship Banking: What Do We Know? , 2000 .

[47]  J. Roos,et al.  Measuring your company's intellectual performance , 1997 .

[48]  Franco Fiordelisi,et al.  Relationship Lending and Credit Quality , 2013 .

[49]  Leonardo Gambacorta,et al.  Bank Profitability and Taxation , 2007 .

[50]  Georgios N. Theriou,et al.  The impact of intellectual capital on firms' market value and financial performance , 2011 .

[51]  Kin Hang Chan.  Impact of intellectual capital on organisational performance: An empirical study of companies in the Hang Seng Index (Part 1) , 2009 .

[52]  A. Pulic.  Intellectual capital – does it create or destroy value? , 2004 .

[53]  G. Kamath.  Intellectual capital and corporate performance in Indian pharmaceutical industry , 2008 .

[54]  A. Purwanto,et al.  Intellectual Capital Performance of Indonesian Banking Sector: A Modified VAIC (M-VAIC) Perspective , 2014 .

[55]  Chien‐Chiang Lee,et al.  The impact of bank capital on profitability and risk in Asian banking , 2013 .

[56]  L. Chen,et al.  Rethinking bank business models: the role of intangibles , 2014 .

[57]  Iftekhar Hasan,et al.  Bank performance, efficiency and ownership in transition countries , 2005 .

[58]  P. Ståhle,et al.  Value added intellectual coefficient (VAIC): a critical analysis , 2011 .

[59]  Robert DeYoung,et al.  Noninterest Income and Financial Performance at U.S. Commercial Banks , 2004 .

[60]  Sirinuch Nimtrakoon.  The relationship between intellectual capital, firms’ market value and financial performance: Empirical evidence from the ASEAN , 2015 .

[61]  K. Kosmidou,et al.  Factors influencing the profitability of domestic and foreign commercial banks in the European Union , 2007 .

[62]  J. Roos,et al.  Intellectual Capital: Navigating in the New Business Landscape , 1997 .

[63]  Dimitrios G. Mavridis,et al.  Intellectual capital performance drivers in the Greek banking sector , 2005 .