Intellectual Capital: Its Impact on Financial Performance and Financial Stability of Ghanaian Banks

Onumah, Joseph Mensah; Duho, King Carl Tornam

doi:10.30958/ajbe.5-3-4

Cited by 26 publications

(31 citation statements)

References 38 publications

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“…The signs of VAIC imply that increasing investment in intellectual capital is likely to increase bank instability; however, this effect is reversed when VAIC investment reaches a certain threshold. These findings are consistent with Onumah and Duho (2019). Further, the same results are also found in credit risk (NPL), at the 10th and 20th quantiles.…”

Section: Quantile Regression Analysissupporting

confidence: 88%

“…Nonetheless, Curado et al (2014) state that banks with low IC score are likely to be failed in Portugal from 2005 to 2009. In the same vein, Onumah and Duho (2019) point out a positive relationship between IC and financial performance in Ghana from 2000 to 2015. Contrary to the study of Ghosh and Maji (2014), Onumah and Duho (2019) also figures out the positive and significant relationship between IC and financial stability.…”

Section: Literature Reviewmentioning

confidence: 85%

“…In the same vein, Onumah and Duho (2019) point out a positive relationship between IC and financial performance in Ghana from 2000 to 2015. Contrary to the study of Ghosh and Maji (2014), Onumah and Duho (2019) also figures out the positive and significant relationship between IC and financial stability. However, among the IC's components, Structural Capital Efficiency (SCE) has a negative impact on both financial performance and stability while Capital Employed Efficiency (CEE) increases financial performance but reduces financial stability.…”

Section: Literature Reviewmentioning

confidence: 85%

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Intellectual Capital and Bank Risk in Vietnam—A Quantile Regression Approach

Nguyen

2021

JRFM

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This study empirically presents evidence of nonlinearity and heterogeneity relation between intellectual capital and risk-taking for the Vietnamese banking system. We used quantile regression methods on a data set of 30 Vietnamese banks from 2007 to 2019. The results showed that bank insolvency was positively affected by its value-added intellectual coefficient (VAIC) at the upper quantiles (i.e., 80th and 90th), while the opposite was true for credit risk (i.e., 10th and 20th quantiles). When observing the VAIC’s components, risk-taking behaviors were also significantly affected by HCE (Human Capital Efficiency), CEE (Capital Employed Efficiency) and SCE (Structural Capital Efficiency) at the 90th quantile of instability distribution and the 10th quantile of credit risk distribution. Furthermore, the results also emphasized that there was an inverse U-shaped association between intellectual capital and bank risk-taking. Therefore, this study provides important implications for policymakers, regulators, bank managers and academics that encourage increasing investment in knowledge assets to minimize bank risks in the long run.

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Section: Quantile Regression Analysissupporting

confidence: 88%

Section: Literature Reviewmentioning

confidence: 85%

Section: Literature Reviewmentioning

confidence: 85%

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Intellectual Capital and Bank Risk in Vietnam—A Quantile Regression Approach

Nguyen

2021

JRFM

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“…The results indicate that the risk variables are not highly correlated using the rule of thumb of 0.7 (Kennedy, 2008;Onumah and Duho, 2019), except for capital risk and insolvency risk. In the case of the three competition proxies used, since two of the proxies will not be included in the same model at a time, there are no hitches.…”

Section: Multicollinearity Testmentioning

confidence: 97%

“…One of the notable actions of the regulator, the Bank of Ghana, is to recapitalize the banking system to make the sector more resilient to risks and shocks. Thus, in line with the Basel III accord, the regulator has increased the regulatory capital of banks from GH¢ 120 million in 2013 to GH¢ 400 million in 2017 (Onumah and Duho, 2019). The aftermath of the directive saw the winding-up of some banks while others merged.…”

Section: Introductionmentioning

confidence: 99%

Bank risk, profit efficiency and profitability in a frontier market

Duho

Onumah

Owodo

et al. 2020

JEAS

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PurposeThe study examines the impact of risk on the profit efficiency and profitability of banks in Ghana.Design/methodology/approachData envelopment analysis was used to estimate profit efficiency scores and accounting ratios were used to measure profitability. The panel corrected standard error regression was used to assess the nexus using a dataset of 32 banks from 2000 to 2015.FindingsThe paper found that the Ghanaian banking industry exhibits a variable return to scale property, suggesting that average costs change with output size. Profit efficiency score for banks closer to the efficiency frontier is 61%. Credit risk is significant in enhancing profit efficiency and return on equity. Market risk is relevant in improving profit efficiency, return on asset and asset turnover. To drive profitability, bank managers have to be committed to effective liquidity risk, insolvency risk and capital risk management. Operational risk reduces shareholders' returns. The impact of size, age, stock exchange listing, cost efficiency and competition have are all been discussed extensively.Practical implicationsThe findings contribute to the knowledge on the risk-performance nexus and provide information that is valuable to academics, bankers and regulators for policy formulation. The findings are relevant to the newly established Financial Stability Council.Originality/valueThis paper appears to be among the premier attempts to examine the effect of various risk types identified in the Basel III framework on bank performance in Africa.

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Impact of intellectual capital efficiency on financial stability in banks: Insights from an emerging economy

et al. 2021

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The paper aims to address the long-term and short-term effects of intellectual capital efficiency (ICE) on Pakistan's bank stability together with the banking system's inherent factors. The ICE is measured through the VAIC™ model and consists of human, rational, and structural capitals. The auto-regressive distributed lag estimation technique results underwrite that an increase in ICE leads to better bank stability and endorses the resource-based theory. Apart from that, findings show the long-term role of ICE in bank stability, although statistics depict no short-term role in this regard. The efficiency ratios, risk-based capital, leverage, and bank size shows a positive impact in the short run. In the long run, the risk-based capital and leverage show a decisively positive influence, while the bank size and efficiency ratio show a negative effect. Findings can be used to increase intangible investments to build a sustainable competitive advantage based on the resourcebased approach. The upcoming review is expected to consider the Fintech effect. K E Y W O R D Sauto-regressive distributed lag (ARDL), banking stability, banks' efficiency, risk practices, value added intellectual capital (VAIC)

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Intellectual Capital: Its Impact on Financial Performance and Financial Stability of Ghanaian Banks

Cited by 26 publications

References 38 publications

Intellectual Capital and Bank Risk in Vietnam—A Quantile Regression Approach

Intellectual Capital and Bank Risk in Vietnam—A Quantile Regression Approach

Bank risk, profit efficiency and profitability in a frontier market

Impact of intellectual capital efficiency on financial stability in banks: Insights from an emerging economy

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