Intellectual capital and bank performance: the moderating role of income diversification

Abstract

PurposeThis study examines whether income diversification moderates the relationship between intellectual capital and bank performance among East African banks.Design/methodology/approachThe study uses a sample of 53 East African banks and a panel dataset for the period 2010–2018. The hypotheses are tested through a hierarchical regression model.FindingsThe regression results indicate that intellectual capital (IC) significantly affects bank performance. Further, the study finds that income diversification has a negative and significant effect on bank performance. The results indicate that income diversification reduced the overall impact of IC (Value Added Intellectual Capital (VAIC)) efficiency on bank performance for the moderating influence. However, the moderating role of income diversification on the relationship between individual components of VAIC (HCE, SCE and CEE) varies. While income diversification enhanced the impact of structural capital efficiency (SCE) on bank performance, it also reduced the effect of human capital efficiency (HCE). Additionally, income diversification did not moderate the impact of capital employed efficiency (CEE) on bank performance.Originality/valueThis study contributes to the literature by demonstrating that non-traditional banking activities influence the IC and bank performance relationship, which is scanty in the existing literature.

Capital Intelectual en el sector bancario peruano

“…El CH es definido como la totalidad de conocimientos, habilidades y experiencias de individuos o empleados de una organización (Bontis, 1999) y es la principal fuente de innovación estratégica en la organización. Muchos investigadores identifican el CH como la dimensión más importante del CI y, por tanto, la base del conocimiento organizacional (Nguyen, 2016;Githaiga, 2022) y bajo esa óptica se reconoce que las organizaciones que invierten mucho en el desarrollo del CH son más rentables e innovadoras (Githaiga, 2022).…”

“…El mundo transita por lo que actualmente se conoce como la sociedad del conocimiento, en la cual los recursos dominantes para la competitividad y creación de la riqueza son los activos intangibles, jugando en este escenario un importante rol el capital intelectual (Edvinsson, 2002;Githaiga, 2022).…”

“…Si bien es cierto que el capital intelectual (CI) es importante en todos los sectores industriales como importante factor de competitividad, creación de valor y rendimiento financiero superior, lo es de manera especial en industrias intensivas en conocimiento y en esta categoría está el sector bancario que en gran medida depende de activos intangibles como son las tecnologías de información y comunicaciones (TIC), la innovación y la relación con los clientes (Abdulsalam et al, 2011;Githaiga, 2022;Nguyen et al, 2023).…”

The moderating effect of income diversification on intellectual capital and company performance: Case study of banking in Indonesia

“…As time goes by, banks' revenue comes from interest income and non-interest income. Banks carried out this effort to anticipate decreased income from interest rate margins (Githaiga, 2023).…”

“…When a company has developed and begun implementing a knowledge-based economy, the company becomes dominant. Proponents of science-based resource theory assume that intellectual capital is a particular and rare resource (Githaiga, 2023). In the modern economic concept, intellectual capital can support innovation, as well as competitiveness and company sustainability, which can increase added value, making the company a priority compared to its competitors (Pertiwi & Suhartini, 2022;Soetanto & Liem, 2019).…”