Purpose This paper aims to evaluate the impact of intellectual capital in terms of human capital, structural capital and capital employed on the financial performance of Islamic and conventional banks in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach Along with the measurement discussion, the empirical analysis examines the relationship between intellectual capital measured through value-added intellectual coefficient (VAIC) and the financial performance of banks in the GCC states by conducting a panel of six GCC countries, including 24 Islamic banks and 32 conventional banks covering 2012–2020 period. Findings This paper shows that while Islamic banks have similar VAIC, human capital efficiency and capital employed efficiency results to conventional banks, Islamic banks have lagged behind conventional banks regarding the impact of structural capital on financial performance. It is argued that this is in contradiction with Islamic ontology and epistemology, which essentialises intellectual capital formation. Practical implications Islamic banks should promote research and development for their intellectual capital at the product, operational and institutional levels, as Islamic banking is considered an alternative financing method, incorporating a new form of knowledge-based institutions inspired by capitalist institutions. Originality/value This study conducts a comparative examination of the intellectual capital performance and its impact on financial performance by using interaction variables to capture any differences between Islamic banks and conventional banks in the GCC countries. The paper also considers the knowledge economy impact as a novelty, which is prominent for the GCC countries. In addition, Islamic ontology’s essentialisation of knowledge and its articulation in the form of intellectual capital within modern understanding is widely discussed, as part of originality. Finally, the findings are located within Islamic ontology and epistemology.

Purpose This paper aims to comparatively examine the impact of the intellectual capital performance on the financial performance of Islamic and conventional banks in the Gulf Cooperation Council (GCC) countries by classifying intellectual capital as human capital, knowledge creation and innovation processes. Design/methodology/approach Along with the theoretical discussion in essentialising the rationale for intellectual capital formation through Islamic norms, the empirical analysis is formulated through the data generated by disclosure analysis using a panel of five GCC countries examining 408 annual reports from 19 Islamic and 23 conventional banks covering 2010–2019 period. In the analysis of the generated data, both fixed and random effects regression models are used. Findings The findings of this paper suggest that Islamic banks perform better than conventional banks in creating intellectual capital through knowledge creation, human capital and intellectual contribution. While the intellectual capital disclosure index and its pillars are significant for Islamic banks, these variables are not significant for the conventional banks in the GCC countries. Research limitations/implications Considering that disclosed information may not reflect actual experience and performance, factual data could also be used to overcome potential shortcomings of disclosure generated data. Practical implications This paper demonstrates that Islamic banks in the GCC have been successful in their intellectual capital performance, whereby they seem to be performing in line with the Islamic ontology. In addition, the disclosure items used in this paper may guide the Islamic and conventional banks in the process of preparing their annual reports. Importantly, they may use these items as benchmarks in further developing their intellectual capital performance for better financial performance. Originality/value This paper essentialises knowledge development and innovation for Islamic banks through the Islamic cognitive system rather than as a requirement of the market mechanism. Secondly, a comparative analysis between Islamic and conventional banks is presented by acknowledging the peculiarities of Islamic banks in the methodology and disclosure index.

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