Determinants of Intellectual Capital on Bank Profitability
DOI:
https://doi.org/10.26437/ajar.v11i3.1164Keywords:
Banking. capital. firm. profitability. shareholdersAbstract
Purpose: The aim is to investigate the determinants of intellectual capital on bank profitability. The objectives are to assess the contribution of VAIC to the profitability of listed banks in Ghana, and to examine the various components of IC's contribution to firms’ profitability.
Design/Methodology/Approach: Secondary data from eight listed banks on the Ghana Stock Exchange (GSE) for the period 2012-2021 were utilised for the analysis. The panel regression technique with random effects was employed for the data analysis.
Research Limitations: The study's shortcomings include its limited scope and the authors’ inability to utilise other IC measures, such as the Tobin's Q ratio, the balanced scorecard, and the market-to-book ratio models.
Findings: The findings reveal a significant and positive relationship between structural capital and firm performance, while a negative and significant relationship was observed between capital employed (CE) and firm performance. The study results again suggested that human capital (HC) has a positive and significant impact on firm performance.
Practical Implications: Banks should invest more in their intellectual capital, since it could be a strategic asset for competition in Ghana.
Social Implications: Understanding the role of IC on banks’ performance will be helpful to prospective investors, shareholders, financial analysts and other users of financial information as IC factors will be considered in their investment decisions.
Originality/Value: The use of the valued-added intellectual capital model (VAIC) in an emerging economy (VAIC) as a measure of the variables and the significant contribution of SCE demonstrates the newness of this research.
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