The Determinants of Intellectual Capital Performance of Banks in Ghana: an Empirical Approach

King Carl Tornam Duho and Joseph Mensah Onumah

No d8cwz, OSF Preprints from Center for Open Science

Abstract: The objective of the study is to examine the variables that determine intellectual capital performance (ICP) of Ghanaian banks. The study applies the Value Added Intellectual Coefficient (VAIC™) model to estimate the ICP of banks, the data envelopment analysis technique to compute the technical efficiency (TE), and cost efficiency (CE) scores while ratio analysis is used to proxy the other variables. The study used an unbalanced panel data of 29 banks over the period 2000-2014 and the panel corrected standard error (PCSE) regression model is used so as to account for heteroscedasticity. Generally, the significant determinants of ICP are research and development investment (R&D), the efficiency of investment in human capital (HCInv), leverage, operational risk, insolvency risk (IR), diversification and return on asset (ROA). R&D, IR and ROA have a significant positive impact on ICP. HCInv and leverage have a significant negative effect on ICP. Diversification significantly enhances ICP but barriers to entry lower ICP. Size and TE negatively affect ICP while CE weakly but positively determines ICP. Bank of Ghana's policy to increase the minimum capital requirement is a good one and will reap the benefit of having a stable, stronger and resilient banking industry which strive for value creation. Banks should consider diversifying their operations so as to increase value. This can easily be done well if R&D is at the core of their operations. Bank managers should factor pricing decisions (strategies) in their attempt to increase value added.

Date: 2018-11-01
New Economics Papers: this item is included in nep-cse
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:d8cwz

DOI: 10.31219/osf.io/d8cwz

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