Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan
The study contributes to the existing literature on intellectual capital (IC) performance and profitability by extending evidence from Pakistan. The study examines the impact of IC performance on the profitability of Pakistani financial institutions. It further examines how corporate governance, ban...
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doaj-eee4b6af90fc4448a13c9e1a77198faa2020-11-25T01:21:53ZengMDPI AGJournal of Risk and Financial Management1911-80742019-04-011225610.3390/jrfm12020056jrfm12020056Intellectual Capital Performance and Profitability of Banks: Evidence from PakistanMuhammad Haris0HongXing Yao1Gulzara Tariq2Ali Malik3Hafiz Mustansar Javaid4School of Finance and Economics, Jiangsu University, Zhenjiang 212013, ChinaSchool of Finance and Economics, Jiangsu University, Zhenjiang 212013, ChinaSchool of Finance and Economics, Jiangsu University, Zhenjiang 212013, ChinaQFBA-Northumbria University, Doha 23245, QatarCollege of Management, Shenzhen University, Shenzhen 518060, ChinaThe study contributes to the existing literature on intellectual capital (IC) performance and profitability by extending evidence from Pakistan. The study examines the impact of IC performance on the profitability of Pakistani financial institutions. It further examines how corporate governance, bank specific, industry specific, and country specific indicators effect Pakistani banks’ profitability. The result reports both the linear and non-linear impact of IC performance on profitability, which affirms an inverted U–shaped relationship. Among the three value added intellectual coefficient (VAIC) components, capital employed efficiency (CEE), and human capital efficiency (HCE) are found to have a significantly positive and structural capital efficiency (SCE) is found to have a significantly negative impact on bank profitability. The study notes a positive impact on profitability of factors like board independence, directors’ compensation, and higher capitalization. It reports a negative impact on profitability of factors like board size, board meetings, credit risk, industry concentration and economic growth. The results also indicate low profitability of banks during the period of government transition. The study provides insights into the important profitability drives and suggests that the impact of investment in IC on profitability is limited to an extent. The findings of this study are likely to be useful for policy makers, management, and academics.https://www.mdpi.com/1911-8074/12/2/56Pakistanbanksprofitabilityintellectual capitalgeneralized method of moments (GMM) |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Muhammad Haris HongXing Yao Gulzara Tariq Ali Malik Hafiz Mustansar Javaid |
spellingShingle |
Muhammad Haris HongXing Yao Gulzara Tariq Ali Malik Hafiz Mustansar Javaid Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan Journal of Risk and Financial Management Pakistan banks profitability intellectual capital generalized method of moments (GMM) |
author_facet |
Muhammad Haris HongXing Yao Gulzara Tariq Ali Malik Hafiz Mustansar Javaid |
author_sort |
Muhammad Haris |
title |
Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan |
title_short |
Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan |
title_full |
Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan |
title_fullStr |
Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan |
title_full_unstemmed |
Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan |
title_sort |
intellectual capital performance and profitability of banks: evidence from pakistan |
publisher |
MDPI AG |
series |
Journal of Risk and Financial Management |
issn |
1911-8074 |
publishDate |
2019-04-01 |
description |
The study contributes to the existing literature on intellectual capital (IC) performance and profitability by extending evidence from Pakistan. The study examines the impact of IC performance on the profitability of Pakistani financial institutions. It further examines how corporate governance, bank specific, industry specific, and country specific indicators effect Pakistani banks’ profitability. The result reports both the linear and non-linear impact of IC performance on profitability, which affirms an inverted U–shaped relationship. Among the three value added intellectual coefficient (VAIC) components, capital employed efficiency (CEE), and human capital efficiency (HCE) are found to have a significantly positive and structural capital efficiency (SCE) is found to have a significantly negative impact on bank profitability. The study notes a positive impact on profitability of factors like board independence, directors’ compensation, and higher capitalization. It reports a negative impact on profitability of factors like board size, board meetings, credit risk, industry concentration and economic growth. The results also indicate low profitability of banks during the period of government transition. The study provides insights into the important profitability drives and suggests that the impact of investment in IC on profitability is limited to an extent. The findings of this study are likely to be useful for policy makers, management, and academics. |
topic |
Pakistan banks profitability intellectual capital generalized method of moments (GMM) |
url |
https://www.mdpi.com/1911-8074/12/2/56 |
work_keys_str_mv |
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