The Impact of Intellectual Capital Efficiency on Bank Risks: Empirical Evidence From the Saudi Banking Industry

Alrashidi, Abdulelah; Alarfaj, Omar

doi:10.32479/ijefi.9959

Cited by 11 publications

(12 citation statements)

References 14 publications

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“…The result of the study is very much important for the bank management to think about the investment in IC, as it indicates that there is an increase of bank's risk with the increase in investment IC. The result of the study agreed with the study Zheng et al, (2018) and disagreed with the study of Alrashidi and Alarfaj, (2020). The results of the study slightly nuance with resource-based theory that state that firms' strategic valuable resources help in improving effectiveness and neutralize the threats Barney (1991).…”

Section: Discussionsupporting

confidence: 60%

“…So, in this study we can expect a negative correlation, but different outcome also found in the past literature regarding the relationship. Several prior studies, such as, Ghosh and Maji (2014); Zheng et al, (2018); Nawaz et al (2019); Innayah et al (2020); Alrashidi and Alarfaj, (2020), Innayah et al, (2020) found negative association between IC efficiency. But opposite result also found in study of Guimon (2005); Nawaz et al, (2019); Sun and Chang (2011) claimed that IC could have positive effect on credit risk as they help in evaluating the organizational competitiveness and provide fine image of firm's management team.…”

Section: Relationship Between Ice and Riskmentioning

confidence: 85%

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The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh

Zheng

Islam

Sadekin

et al. 2022

IJRBS

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The main purpose of this study is to identify the impact of intellectual capital efficiency (ICE) also known as knowledge capital along with its components human capital efficiency (HCE) and structural capital efficiency (SCE) on bank risk-taking behavior in Bangladesh. To reveal this effect, the study uses generalized method of moment (GMM) estimator and Two Stages Least Square estimator (to check the Robustness) and unbalanced panel data of 32 commercial banks of Bangladesh consisting of 530 bank-year observations during the year 2003-2020. The main results of the study are: (a) ICE is significantly and positively connected with a bank’s credit risk which indicates credit risk grows up with the increase of Intellectual capital efficiency, and (b) Both the human capital efficiency and structural capital efficiency positively impacts credit risk but the impact of SCE is not significant as HCE, (c) Bank performance (ROA), RWATA, macro variable inflation, and size have a negative impact on bank risk whereas ID and GGDP insignificant positively impact on bank’s risk. Finally, the results of the study will assist the stakeholders, policymakers, and academicians for future research.

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Section: Discussionsupporting

confidence: 60%

Section: Relationship Between Ice and Riskmentioning

confidence: 85%

The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh

Zheng

Islam

Sadekin

et al. 2022

IJRBS

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“…Ref. [13] supports this, noting the importance of intellectual capital in managing risks in the Saudi banking industry. This aspect is particularly vital as banks face increasingly volatile financial markets.…”

Section: The Impact Of Intellectual Capital On Sustainable Bank Perfo...mentioning

confidence: 84%

The Impact of Intellectual Capital on Sustainable Performance: Banking Sector in Saudi Arabia

Sayed,

Nefzi

2024

Sustainability

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This study investigates the impact of intellectual capital on the sustainable performance of banks in Saudi Arabia, focusing on the period from 2012 to 2022. Utilizing data from 10 major Saudi banks, the research examines how different components of intellectual capital—Human capital efficiency (HCE), Structural capital efficiency (SCE), and Capital employed efficiency (CEE)—influence key financial performance indicators such as return on equity (ROE) and Net profit margin (NPM). The study is grounded in the resource-based view of the firm, which suggests that a firm’s internal resources can provide a sustainable competitive advantage. The analysis employs panel data techniques, including fixed and random effect models, to assess the relationships between intellectual capital components and bank performance while controlling for variables like bank size (SIZE), financial leverage (LEV), gross domestic product growth (GGDP), inflation (INF), and the impact of the COVID-19 pandemic (COV). The findings reveal that intellectual capital significantly enhances bank performance in Saudi Arabia, with human capital efficiency showing the most decisive influence on ROE and NPM. Structural capital and capital employed efficiency also contribute positively but vary in their impact on different performance measures. This research contributes to the theoretical and practical understanding of the role of intellectual capital in promoting sustainable banking practices. It underscores the importance of the strategic management of intellectual capital in enhancing financial performance and achieving sustainability goals, particularly in the context of Saudi Arabia’s Vision 2030. The study’s insights are relevant for bank managers and policymakers who leverage intellectual capital for economic diversification and sustainable development.

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“…While leverage can amplify returns by increasing the resources available for investment, it also elevates financial risk. Empirical research supports a generally positive, though complex, relationship between leverage and bank profitability, indicating that careful leverage management is essential to avoid excessive risk (Alshadadi & Deshmukh, 2023;Alrashidi & Alarfaj, 2020).…”

Section: Internal Control Variables Macroeconomic Indicators and Covi...mentioning

confidence: 99%

The Impact of Intellectual Capital on Sustainable Performance: Banking Sector in Saudi Arabia

Sayed,

Nefzi

2024

Preprint

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This study investigates the impact of intellectual capital on the sustainable performance of banks in Saudi Arabia, focusing on the period from 2012 to 2022. Utilizing data from ten major Saudi banks, the research examines how different components of intellectual capital—Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE), and Capital Employed Efficiency (CEE)—influence key financial performance indicators such as Return on Equity (ROE) and Net Profit Margin (NPM). The study is grounded in the resource-based view of the firm, which suggests that a firm’s internal resources can provide a sustainable competitive advantage. The analysis employs panel data techniques, including fixed and random effects models, to assess the relationships between intellectual capital components and bank performance while controlling for variables like bank size, financial leverage, GDP growth, inflation, and the impact of the COVID-19 pandemic. The findings reveal that intellectual capital significantly enhances bank performance in Saudi Arabia, with human capital efficiency showing the most decisive influence on ROE and NPM. Structural capital and capital employed efficiency also contribute positively but vary in their impact on different performance measures. This research contributes to the theoretical and practical understanding of the role of intellectual capital in promoting sustainable banking practices. It underscores the importance of strategic management of intellectual capital in enhancing financial performance and achieving sustainability goals, particularly in the context of Saudi Arabia's Vision 2030. The study's insights are relevant for bank managers and policymakers who leverage intellectual capital for economic diversification and sustainable development.

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The Impact of Intellectual Capital Efficiency on Bank Risks: Empirical Evidence From the Saudi Banking Industry

Cited by 11 publications

References 14 publications

The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh

The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh

The Impact of Intellectual Capital on Sustainable Performance: Banking Sector in Saudi Arabia

The Impact of Intellectual Capital on Sustainable Performance: Banking Sector in Saudi Arabia

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