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Assessing the Connection between Intellectual Capital and Financial Success in Islamic Banking: Empirical Analysis

Author

Listed:
  • Dr. Farah Yasser

    (Assistant professor, Dr. Hasan Murad School of Management, University of Management and Technology, Lahore, Pakistan)

  • Dr. Ghulam Murtaza Lahbar

    (Assistant Professor, Benazir School of Business, Benazir Bhutto Shaheed University, Lyari, Karachi, Pakistan)

  • Dua Ali

    (MS Scholar, Bahria University Islamabad, Pakistan)

  • Ali Raza Zaidi

    (Department of Business Administration, Government College University, Hyderabad, Pakistan)

Abstract

Intellectual capital (I.C.) and other intangible assets have changed the modern economy, especially knowledge-intensive fields like banking. Utilizing the VAIC model, the study examines the correlation between financial performance and I.C. efficiency in Islamic institutions in Pakistan. This research fills a void in the literature regarding Islamic banking's role in improving financial performance by concentrating on Islamic banking's distinctive context governed via Shariah-compliant principles. The research sample includes 11 Islamic banks; more studies evaluate I.C. components and banks' financial performance through AMOS software. The findings suggest that greater I.C. efficiency, mainly through human and structural capital, positively impacts financial outcomes, offering insights into how Islamic banks optimize intangible assets to enhance financial performance. This research helps banks improve economic competitiveness and sustainability, centred on knowledge and recognition of Islamic banking I.C.'s strategic position.

Suggested Citation

  • Dr. Farah Yasser & Dr. Ghulam Murtaza Lahbar & Dua Ali & Ali Raza Zaidi, 2024. "Assessing the Connection between Intellectual Capital and Financial Success in Islamic Banking: Empirical Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(3), pages 197-202.
    • Handle: RePEc:rfh:bbejor:v:13:y:2024:i:3:p:197-202
    DOI: https://doi.org/10.61506/01.00469
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    References listed on IDEAS

    as
    1. de Villiers, Charl & Sharma, Umesh, 2020. "A critical reflection on the future of financial, intellectual capital, sustainability and integrated reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 70(C).
    2. Nijah Akram & Dr. Syed Sohaib Zubair & Fahad Asghar & Zuhaib Nishtar & Kashif Lodhi, 2023. "Public-Private Partnerships (PPPs) in Construction Projects: A Study on the Utilization, Effectiveness, and Challenges in Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(3), pages 402-409.
    3. Fahad Asghar & Palwasha Farooq & Muhammad Nadim & Zain ul Abidin & Fazli Wadood, 2023. "Global Financial Crisis: A critical study on Role of Auditor’s and Stakeholder," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 9(2), pages 452-458.
    4. Tasawar Nawaz & Roszaini Haniffa & Mohammad Hudaib, 2021. "On intellectual capital efficiency and shariah governance in Islamic banking business model," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3770-3787, July.
    5. Kianto, Aino & Ritala, Paavo & Vanhala, Mika & Hussinki, Henri, 2020. "Reflections on the criteria for the sound measurement of intellectual capital: A knowledge-based perspective," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 70(C).
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    7. Muhammad Haris & HongXing Yao & Gulzara Tariq & Ali Malik & Hafiz Mustansar Javaid, 2019. "Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan," JRFM, MDPI, vol. 12(2), pages 1-26, April.
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