Intellectual capital efficiency and bank’s performance: A comparative study after the global financial crisis
ISSN: 0114-0582
Article publication date: 4 November 2019
Issue publication date: 4 November 2019
Abstract
Purpose
Intellectual capital (IC) plays a pivotal role in the high-tech and knowledge-based economic sectors. With the emergence of FinTech, which, with respect to the banking sector, is merging high-tech with the k-economy, there is an emerging need to highlight the importance and understand the dynamics of bank IC. With respect to Gulf Cooperation Council (GCC) economies, where FinTech has become de rigueur, banking is bifurcated into Islamic and banking sectors. Through comparative empirical analysis, the purpose of this paper is to examine IC efficiency in Islamic and conventional banks with a view to elucidating the impact of IC, in aggregate and decomposed into its components, on an operational, financial and market performance of Islamic banks juxtaposed with conventional banks.
Design/methodology/approach
Using data collected from 59 banks for five years (2012-2016) involving 295 observations, an independent variable derived from the modified value added IC (MVAIC) components are regressed against dependent bank performance indicator variables [Return on Assets (ROA), Return on Equity (ROE) and Tobin’s Q (TQ)]. Two types of control variables complete the regression analysis in this study: bank-specific and macroeconomic.
Findings
The findings elicited from the empirical results demonstrate that there is positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. In conventional banks, however, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE).
Originality/value
The model in this paper presents a valuable analytical framework for exploring IC efficiency as a driver of performance in dual-sector banking economies characterized by co-existence of Islamic and conventional financial institutions. In addition, this paper highlights bank management lacunae manifesting in terms of the weak nexus between: IC and asset efficiency (ROA) in Islamic banks and IC and market value (TQ) in conventional banks.
Keywords
Acknowledgements
Retraction notice: The publishers of Pacific Accounting Review wish to retract the article “Intellectual capital efficiency and bank’s performance: A comparative study after the global financial crisis” by A. Buallay, R. Cummings, and A. Hamdan which appeared in Volume 31 issue 4, 2019.
It has come to our attention that large portions of this article are taken, without attribution, from an earlier article by A. Buallay (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.
The Pacific Accounting Review submission guidelines make it clear that articles must be original and must not infringe any existing copyright.
The publishers of the journal sincerely apologize to the readers.
Citation
Buallay, A., Cummings, R. and Hamdan, A. (2019), "Intellectual capital efficiency and bank’s performance: A comparative study after the global financial crisis", Pacific Accounting Review, Vol. 31 No. 4, pp. 672-694. https://doi.org/10.1108/PAR-04-2019-0039
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited