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

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  • King Carl Tornam Duho

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.

Suggested Citation

  • King Carl Tornam Duho, 2020. "Intellectual capital and technical efficiency of banks in an emerging market: a slack-based measure," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(7), pages 1711-1732, May.
    • Handle: RePEc:eme:jespps:jes-06-2019-0295
    DOI: 10.1108/JES-06-2019-0295
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    Citations

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    Cited by:

    1. Prasojo Prasojo & Winwin Yadiati & Tettet Fitrijanti & Memed Sueb, 2022. "Cross-Region Comparison Intellectual Capital and Its Impact on Islamic Banks Performance," Economies, MDPI, vol. 10(3), pages 1-15, March.
    2. Ahmed Mohamed Habib & Tamanna Dalwai, 2024. "Does the Efficiency of a Firm’s Intellectual Capital and Working Capital Management Affect Its Performance?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3202-3238, March.
    3. Sergey A. Vasiliev & Irina A. Nikonova & Olga S. Miroshnichenko, 2022. "Banks, Financial Platforms and Big Data: Development Trends and Regulation Directions," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 105-119, October.
    4. Oriana Jannett Pitre-Cedeño & Edila Eudemia Herrera-Rodríguez, 2024. "Intellectual Capital and Performance of Banking and Financial Institutions in Panama: An Application of the VAIC™ Model," JRFM, MDPI, vol. 17(9), pages 1-17, September.
    5. Dat T. Nguyen & Tu D. Q. Le & Tin H. Ho, 2021. "Intellectual Capital and Bank Risk in Vietnam—A Quantile Regression Approach," JRFM, MDPI, vol. 14(1), pages 1-15, January.

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