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On intellectual capital and financial performances of banks in Malaysia

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  • Law Teck Poh
  • Adem Kilicman
  • Siti Nur Iqmal Ibrahim

Abstract

The purpose of the study is to consider and measure the intellectual capital towards the financial performances of the local banks in Malaysia. The study will implement the Value Added Intellectual Coefficient (VAIC) method to evaluate the financial performances of the ten local banks in Malaysia. The study will determine how the intellectual capital influences the financial performances of banks in terms of two periods which are latest six years from 2011 to 2016 and the past ten years from 2007 to 2016. The regression analysis results to indicate that the components of intellectual capital have their influences towards the bank’s financial performances indicators. Over the six years and ten years periods, Capital Employed Efficiency has the significant relationship on Return on Assets. For the Return on Equity, Human Capital Efficiency (HCE) has the significant relationship over the latest six years while Structural Capital Efficiency (SCE) has the significant relationship over the ten years. Then, SCE has the significant relationship towards the Leverage (LEV) for the latest six years compare to the past ten years whereby HCE has the significant relationship towards the LEV. These results determine that the banks need to focus on the three components of intellectual capital whereby all the three efficiencies have the influences to enhance the best financial performances in Malaysia’s banking sector.

Suggested Citation

  • Law Teck Poh & Adem Kilicman & Siti Nur Iqmal Ibrahim, 2018. "On intellectual capital and financial performances of banks in Malaysia," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1453574-145, January.
    • Handle: RePEc:taf:oaefxx:v:6:y:2018:i:1:p:1453574
    DOI: 10.1080/23322039.2018.1453574
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    Citations

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    Cited by:

    1. Muhammad Khalique, T. Ramayah, Muhammad Tahir Ali Shah, Zafar Iqbal, 2019. "Intellectual Capital and Financial Performance of Banks in Sialkot Pakistan," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 6(1), pages 50-61, March.
    2. Thich Nguyen & Chi Huu Lu, 2024. "Financial intermediation in banks and the key role of intellectual capital: new analysis from an emerging market," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(2), pages 508-522, June.
    3. Ummu Salma Al-Azizah & Bagus Pamungkas Wibowo, 2023. "Impact of Intellectual Capital on Financial Performance: Panel Evidence from Banking Industry in Indonesia," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 51-65.
    4. Monika Barak & Rakesh Kumar Sharma, 2024. "Does intellectual capital impact the financial performance of Indian public sector banks? An empirical analysis using GMM," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.
    5. Muhammad Madyan & Iksan Abdi Nugraha & Wisudanto Wisudanto & Rahmat Setiawan & Novian Abdi Firdausi, 2022. "Building firm value and financial performance through intellectual capital: the Indonesia stock exchange's experience," Economics Bulletin, AccessEcon, vol. 42(2), pages 294-302.
    6. Hongxing Yao & Muhammad Haris & Gulzara Tariq & Hafiz Mustansar Javaid & Muhammad Aamir Shafique Khan, 2019. "Intellectual Capital, Profitability, and Productivity: Evidence from Pakistani Financial Institutions," Sustainability, MDPI, vol. 11(14), pages 1-30, July.
    7. Atta Ullah & Chen Pinglu & Saif Ullah & Ningyu Qian & Mubasher Zaman, 2023. "Impact of intellectual capital efficiency on financial stability in banks: Insights from an emerging economy," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1858-1871, April.
    8. MUSTAFA, Murtala Oladimeji Abioye & STELLA, Uwazuluonye Audu, 2023. "The Nexus between Human Capital Investment and Firm Growth of Selected Non-Financial Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(8), pages 467-481, August.
    9. Jian Xu & Muhammad Haris & Hongxing Yao, 2019. "Should Listed Banks Be Concerned with Intellectual Capital in Emerging Asian Markets? A Comparison between China and Pakistan," Sustainability, MDPI, vol. 11(23), pages 1-23, November.
    10. Ngoc Phu Tran & Co Thi Huyen Dinh & Hien Thi Thu Hoang & Duc Hong Vo, 2022. "Intellectual Capital and Firm Performance in Vietnam: The Moderating Role of Corporate Social Responsibility," Sustainability, MDPI, vol. 14(19), pages 1-13, October.

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