Does intellectual capital efficiency matter for banks' performance and risk-taking behavior?

The aim of this study is to investigate whether a bank's intellectual capital (IC) efficiency impacts its performance and risk-taking behavior in an emerging economic country. The study used panel data (unbalanced) of 30 commercial banks in Bangladesh during 2002-2019. Data were analyzed throug...

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Bibliographic Details
Published in:Cogent economics & finance 2022-12, Vol.10 (1), p.1-26
Main Authors: Zheng, Changjun, Islam, Md. Nazmul, Hasan, Najmul, Halim, Md. Abdul
Format: Article
Language:English
Subjects:
Bangladesh
bank performance
Banking
Banks
Behavior
Commercial banks
Economic crisis
Efficiency
Financial institutions
GDP
Generalizability
Generalized method of moments
Gross Domestic Product
Inflation rates
Intellectual capital
Leverage
Loans
Panel data
Policy making
risk
Risk behavior
Risk taking
Surveillance
Trade
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Summary:The aim of this study is to investigate whether a bank's intellectual capital (IC) efficiency impacts its performance and risk-taking behavior in an emerging economic country. The study used panel data (unbalanced) of 30 commercial banks in Bangladesh during 2002-2019. Data were analyzed through the use of the generalized method of moments (GMM) by Eviews-10. The pragmatic results demonstrate that IC efficiency (HCE), RCE and SCE have significant positive (negative) impacts both on the bank's performance and risk-taking behavior, this finding is similar to resource-based theory. Moreover, adequate capital and liquidity position improves bank performance, but leverage, size, and non-performing loans to total loan have a significant negative impact on bank performance. In addition, the macro-economic variable growth (i.e., gross domestic product) rate of inflation and financial crisis year negatively impacts both bank performance and risk-taking behavior. The panel dataset in this research is restricted to the Bangladeshi banking sector, which restricts the study's generalizability. Bank performance in Bangladesh is unaffected by leverage, loan size, and the proportion of non-performing loans to total loans. Regulatory authorities, managers and policymakers should step up their surveillance of banks and other financial institutions when the GDP inflation rate and financial crisis year have a negative impact on both bank performance and risk-taking behavior.
ISSN:2332-2039
2332-2039
DOI:10.1080/23322039.2022.2127484