Does intellectual capital efficiency matter for banks’ performance and risk-taking behavior?

Abstract

The aim of this study is to investigate whether a bank’s intellectual capital (IC) efficiency impacts its performance and risk-taking behavior in an emerging economic country. The study used panel data (unbalanced) of 30 commercial banks in Bangladesh during 2002–2019. Data were analyzed through the use of the generalized method of moments (GMM) by Eviews-10. The pragmatic results demonstrate that IC efficiency (HCE), RCE and SCE have significant positive (negative) impacts both on the bank’s performance and risk-taking behavior, this finding is similar to resource-based theory. Moreover, adequate capital and liquidity position improves bank performance, but leverage, size, and non-performing loans to total loan have a significant negative impact on bank performance. In addition, the macro-economic variable growth (i.e., gross domestic product) rate of inflation and financial crisis year negatively impacts both bank performance and risk-taking behavior. The panel dataset in this research is restricted to the Bangladeshi banking sector, which restricts the study’s generalizability. Bank performance in Bangladesh is unaffected by leverage, loan size, and the proportion of non-performing loans to total loans. Regulatory authorities, managers and policymakers should step up their surveillance of banks and other financial institutions when the GDP inflation rate and financial crisis year have a negative impact on both bank performance and risk-taking behavior.

Keywords:

• Intellectual capital
• bank performance
• risk
• commercial banks
• Bangladesh

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data Availability Statement

Final (structured) data are available upon the author’s request.

Correction

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

This study was not supported by any external funding.

Notes on contributors

Changjun Zheng

Dr Changjun Zheng is a Professor of Public Administration at Huazhong University of Science and Technology, Wuhan, PR. China. His prior area of research interest is not limited to Risk Management, Assets Pricing, Capital Management, Financial Economics, etc. Dr Zheng has a number of renowned articles that appear in Economic Modeling, Research in International Business and Finance, Journal of Banking and Finance etc.

Md Nazmul Islam

Md Nazmul Islam received his MBA & BBA Degrees in the Department of Accounting and Information Systems from University of Rajshahi, Bangladesh. His primary research interest is in Financial Economics, Risk Management, porate Taxation, porate Governance, Technology and Innovation, etc. His research papers have published in esteemed journals. Besides, he is a regular reviewer of the Journal of Financial Regulation and Compliance, Journal of Economics Finance and Administrative Science, FIIB Business Review etc.

Najmul Hasan

Dr. Najmul Hasan is currently working as an Assistant Professor in Information Systems at BRAC University, Bangladesh, and received his Ph.D. majoring in Management Science and Engineering with a specialization in Information Systems from the School of Management, Huazhong University of Science and Technology (HUST), Wuhan, China. His research interests are in information systems, predictive analytics, and machine learning. He has published 36 journal articles in numerous top ranked international journals successively and 4 conference papers. He received the ”Excellent Academic Award” at HUST for three consecutive academic years (2018–2019, 2019–2020, and 2020–2021). He was also awarded ”HUST 2022 Honorary International Graduates” (for outstanding research performance). Dr. Hasan is a regular reviewer for numerous renowned journals. During his career, he has been involved in more than 100 academic, social, and market research projects. Dr. Hasan can be reached at: E- mail: [email protected]

Md. Abdul Halim

Md. Abdul Halim, Lecturer, Department of Business Administration, Institute of Science Trade and Technology, Mirpur, Dhaka, Bangladesh. He received his MBA & BBA (Accounting and Information Systems) from the Department of Business Administration, Mawlana Bhashani Science and Technology University, Bangladesh. His primary research interest is in Financial Economics, Risk Management, Corporate Taxation, Corporate Governance, Technology and Innovation, etc. His research papers have published in esteemed journals including in International Journal of Islamic and Middle Eastern Finance and Management. Besides, he is a regular reviewer of the Journal of Financial Regulation and Compliance, Journal of Economics Finance and Administrative Science, FIIB Business Review etc. Mr. Halim can be reached at: E- mail: [email protected]