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

Changjun Zheng, Md Nazmul Islam, Md Nazmus Sadekin and Syed Moudud Ul Huq
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Changjun Zheng: School of Management, Huazhong University of Science and Technology (HUST) 1037 Luoyu Road, Hongshan District, Wuhan 430074, P.R. China.
Md Nazmul Islam: School of Management, Huazhong University of Science and Technology (HUST) 1037 Luoyu Road, Hongshan District, Wuhan 430074, P.R. China.Department of Accounting, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902,Bangladesh
Md Nazmus Sadekin: Department of Economics, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902,Bangladesh
Syed Moudud Ul Huq: Department of Accounting, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902,Bangladesh

International Journal of Research in Business and Social Science (2147-4478), 2022, vol. 11, issue 4, 183-192

Abstract: 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. Key Words:Bank Performance; Bank Risk; Commercial Bank; Credit Risk; Intellectual capital; Bangladesh.

Date: 2022
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