Intellectual capital performance in the banking sector

Mahesh Joshi (RMIT University, Melbourne, Australia)
Daryll Cahill (RMIT University, Melbourne, Australia)
Jasvinder Sidhu (University of Ballarat, Ballarat, Australia)

Journal of Human Resource Costing & Accounting

ISSN: 1401-338X

Publication date: 29 June 2010



The purpose of this paper is to examine the intellectual capital (IC) performance of Australian banks for the period 2005‐2007. It also aims to examine the relationship amongst various constituents of IC performance.


The value added intellectual coefficient (VAIC™) approach developed by Pulic is used to determine the IC performance of the Australian banks. The required data to calculate different constituents of IC was obtained from the annual reports of Australian banks.


The paper reveals that VAIC™ has a significant relation with human costs and the value addition made by the Australian banks. All Australian owned banks have relatively higher human capital efficiency than capital employed efficiency and structural capital efficiency. The size of the bank in terms of total assets, total number of employees and total shareholders equity has little or no impact on the IC performance of the Australian owned banks.

Research limitations/implications

The paper analyses IC performance of only 11 Australian owned banks. However, the more than 90 per cent market share enjoyed by these banks still promises a degree of validation of the results of the paper from the Australian perspective or similar banking structure in some countries.

Practical implications

The findings may serve as a useful input for bankers to apply knowledge management in their institutions and in addressing the factors affecting IC performance in order to maximise their value creation. The findings of the study would also provide some information to the stakeholders and potential investors to assess the value creation capabilities of this group of banks.


This is the first paper that examines the relationship of VAIC™ and the size of the firms for Australian owned banks in Australia.



Mahesh Joshi, Daryll Cahill and Jasvinder Sidhu (2010) "Intellectual capital performance in the banking sector", Journal of Human Resource Costing & Accounting, Vol. 14 No. 2, pp. 151-170

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