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Intellectual capital and technical efficiency of banks in an emerging market: a slack-based measure

King Carl Tornam Duho (Department of Accounting, University of Ghana Business School, Accra, Ghana) (IMANI Africa Centre for Policy and Education, Accra, Ghana)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 20 May 2020

Issue publication date: 23 October 2020

479

Abstract

Purpose

This paper investigates the impact of intellectual capital and its components on slack-based technical efficiency (SBM-TE) of banks.

Design/methodology/approach

Data envelopment analysis is used to compute SBM-TE scores and the Value-Added Intellectual Coefficient (VAIC™) model is used to measure intellectual capital. An unbalanced panel of 32 banks that operated from 2000 to 2017 has been used.

Findings

Overall, the efficiency scores are averaged at 79%, suggesting that an inefficient bank needs to enhance technical efficiency by 21% to be at par with the best performing banks. Beta-convergence and sigma-convergence exist among banks with faster speed evident among listed and local banks. Intellectual capital has a positive impact on SBM-TE and human capital is the main driver of technical efficiency among banks. This result is specifically evident among non-listed banks and foreign banks. Economies of scale property are also evident among the banks. Competition and asset tangibility inhibit technical efficiency among banks.

Practical implications

Banks are advised to invest in value-adding emerging technologies and their employees so as to enhance their efficiency. The study offers insights for policymakers, practitioners and researchers in emerging markets.

Originality/value

The study is premier in employing the SBM-TE to explain the intellectual capital and efficiency nexus, as well as, testing for both beta-convergence and sigma-convergence.

Keywords

Acknowledgements

The author is grateful to the Editor-in-Chief, Prof. Mohsen Bahmani-Oskooee and the anonymous reviewer(s) for their insightful comments. Also, the author is grateful to Divine Mensah Duho for his support regarding data collection and Joseph Tettey for proofreading the manuscript.

Citation

Duho, K.C.T. (2020), "Intellectual capital and technical efficiency of banks in an emerging market: a slack-based measure", Journal of Economic Studies, Vol. 47 No. 7, pp. 1711-1732. https://doi.org/10.1108/JES-06-2019-0295

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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