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1 – 3 of 3King Carl Tornam Duho and Joseph Mensah Onumah
The purpose of this paper is to examine the impact of intellectual capital and its components on bank diversification choice.
Abstract
Purpose
The purpose of this paper is to examine the impact of intellectual capital and its components on bank diversification choice.
Design/methodology/approach
Both asset and income diversification are computed and an unbalanced panel data set of 32 banks covering the period 2000–2015 have been used. The panel corrected standard error regression has been used to account for serial correlation and heteroscedasticity.
Findings
The study found that intellectual capital determines the choice of diversifying. Precisely, intellectual capital motivates asset diversity but it dissuades income diversification. Human capital and structural capital are major components that determine asset diversity decisions. Income diversification decision, in this case to choose a focus strategy, is determined by human capital. This gives credence for the human capital theory in Ghana. Competition encourages a focus strategy. Bank size and leverage enhances income diversification while stock exchange listing and government ownership fosters the focus strategy.
Practical implications
Diversification strategy, knowledge base of staff, corporate governance and internal control have been considered as factors leading to the collapse of some Ghanaian banks in 2017–2018. The study provides relevant insights for regulators, decision support units and corporate boards. Intellectual capital and value added metrics should be used for modelling and decision making as they have value relevance.
Originality/value
This is a premier study that has examined the nexus between diversification strategy and intellectual capital in banks.
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Keywords
Nicholas Asare, Margaret Momo Laryea, Joseph Mensah Onumah and Michael Effah Asamoah
This study examines the causal relationship between intellectual capital and asset quality of banks in Ghana.
Abstract
Purpose
This study examines the causal relationship between intellectual capital and asset quality of banks in Ghana.
Design/methodology/approach
Using annual data extracted from audited financial statements of 24 banks from 2006 to 2015, a ratio of non-performing loans to gross loans and advances is employed to estimate asset quality growths while the value-added intellectual coefficient by Pulic (2008, 2004) measures intellectual capital. The panel-corrected standard errors estimation technique is used to estimate panel regressions with asset quality as the dependent variable.
Findings
Asset quality of banks in Ghana is generally not affected by intellectual capital. However, when intellectual capital is divided into its components, the study indicates that there are significant positive relationships between asset quality and two components of intellectual capital. Thus, structural capital and human capital efficiencies positively affect the asset quality of banks.
Practical implications
The findings of the study implore managements of banks to increase structural and human capital investments and efficiencies to improve asset quality. Furthermore, the results have direct implications on developments in financial markets in emerging economies.
Originality/value
The study analyses the link between typical intellectual capital and asset quality of banks which is yet to be empirically examined in an emerging banking market.
Details
Keywords
Nicholas Asare, Francis Aboagye-Otchere and Joseph Mensah Onumah
This study examines the nature of the relationship between board structures (BSs) and intellectual capital (IC) of banks in Africa.
Abstract
Purpose
This study examines the nature of the relationship between board structures (BSs) and intellectual capital (IC) of banks in Africa.
Design/methodology/approach
Using annual data from financial statements of 366 banks from 26 African countries from 2007 to 2015, the study estimates IC using the value-added intellectual coefficient (VAIC) and BSs using board size, board independence and board gender diversity. The system generalized method of moments and panel-corrected standard error estimation strategies are used to estimate panel regressions.
Findings
There is a significant negative relationship between board independence and intellectual capital. The results also indicate that the IC of banks does not depend on board size and board gender diversity.
Practical implications
The study's findings provide evidence of the extent to which BSs have been instituted to support investments in intellectual capital as a means of improving the performance of banks in Africa.
Originality/value
This study provides some empirical evidence from Africa's banking sector to justify that banks with better IC have boards that are less independent. This study is one of the few studies that employs many countries' data.
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