Intellectual Capital And Financial Performance: A Study In The Context Of Pakistani Banking Sector

This research investigates the interrelationship between the efficiency of intellectual capital (as measured by Ante Pulic’s VAIC technique) and the financial returns (as measured by the ROA and ROE ratios) of scheduled banks working in Pakistan. Secondary data of 26 banks was obtained from the period, 2009 to 2019. This panel data was analyzed by using stepwise multiple regression technique. The results of the empirical analysis show that the intellectual capital of Pakistani scheduled banks have a good impact on its financial returns. When the intellectual capitals of these banks are further divided into its components then, the human capital and the capital employed have a positive and significant impact on their financial performance. Whereas, the result of the structural capital efficiency coefficient shows that it has a negative relation with financial performance. On the basis of banks ownership, private-owned banks have the highest values of VAIC coefficients as compare to public-owned banks. For future research, inclusion of other financial firms like insurance companies, mutual funds, assets management firms etc in the study could provide a best estimate of this concept. This study is set to contribute to the banking sector of Pakistan by providing an empirical evidence of IC impact on financial performance.