On intellectual capital and financial performances of banks in Malaysia

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.

Keywords:

• intellectual capital
• financial performance
• human capital efficiency
• structural capital efficiency

Public Interest Statement

The overall performances of business not only determined by the management of tangible resources, but also on the intangible resources. Nowadays, intellectual capital became new and important components that contribute value creation for an organization. The determination of banks might have good financial performances over a particular period however not necessarily show that they are managed the intellectual capital efficiently. The present study will analyze the intellectual capital towards the financial performances of banks in Malaysia by using Value Added Intellectual Coefficient (VAIC) Model over the periods from 2007 to 2016..

Additional information

Funding

The author received no direct funding for this research.

Notes on contributors

Adem Kilicman

Adem Kilicman is a lecturer in the Department of Mathematics at Universiti Putra Malaysia (UPM), Malaysia. His research interest includes Application of Functional Analysis as well as Topology, and its applications. He serves as Editor-in-Chief as well as Member of Editor for some International Journals. He has also published many papers in National and International Journals