To read the full version of this content please select one of the options below:

Intellectual capital and performance of Islamic and conventional banking: Empirical evidence from Gulf Cooperative Council countries

Amina Buallay (Brunel University London, London, UK)

Journal of Management Development

ISSN: 0262-1711

Article publication date: 16 August 2019

Abstract

Purpose

Intellectual capital (IC) is considered as a lifeblood of the high-tech and knowledge-based sectors. Therefore, there is a great need to highlight the importance of IC in the banking sector. Since the banking sector in the gulf countries is mainly based on Islamic and conventional banking, the purpose of this paper is to provide a comparative empirical analysis between IC efficiency in Islamic and conventional banks, and its impacts on a bank’s operational, financial and market performance.

Design/methodology/approach

This study examined 59 banks for five years to end up with 295 observations. The independent variable is the modified value added IC components; the dependent variables are performance indicators (return on assets, return on equity and Tobin’s Q). Two control variables are utilized in this study: bank-specific and macroeconomic.

Findings

The findings deduced from the empirical results demonstrate that there is a positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. However, in conventional banks, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE).

Originality/value

The results of this study can be used to present a successful model for the Islamic and conventional banks to concentrate more on the role of IC in enhancing the bank’s performance. In addition, the results of this study may provide a wake-up call for Islamic banks to examine the reasons for the imperfect relationship between the IC and asset efficiency (ROA), as well as for conventional banks to examine the reasons for an imperfect relationship between the IC and market value (TQ).

Keywords

Citation

Buallay, A. (2019), "Intellectual capital and performance of Islamic and conventional banking: Empirical evidence from Gulf Cooperative Council countries", Journal of Management Development, Vol. 38 No. 7, pp. 518-537. https://doi.org/10.1108/JMD-01-2019-0020

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited