Intellectual capital and technical efficiency of banks in an emerging market: a slack-based measure

King Carl Tornam Duho

Journal of Economic Studies, 2020, vol. 47, issue 7, 1711-1732

Abstract: Purpose - This paper investigates the impact of intellectual capital and its components on slack-based technical efficiency (SBM-TE) of banks. Design/methodology/approach - Data envelopment analysis is used to compute SBM-TE scores and the Value-Added Intellectual Coefficient (VAIC™) model is used to measure intellectual capital. An unbalanced panel of 32 banks that operated from 2000 to 2017 has been used. Findings - Overall, the efficiency scores are averaged at 79%, suggesting that an inefficient bank needs to enhance technical efficiency by 21% to be at par with the best performing banks. Beta-convergence and sigma-convergence exist among banks with faster speed evident among listed and local banks. Intellectual capital has a positive impact on SBM-TE and human capital is the main driver of technical efficiency among banks. This result is specifically evident among non-listed banks and foreign banks. Economies of scale property are also evident among the banks. Competition and asset tangibility inhibit technical efficiency among banks. Practical implications - Banks are advised to invest in value-adding emerging technologies and their employees so as to enhance their efficiency. The study offers insights for policymakers, practitioners and researchers in emerging markets. Originality/value - The study is premier in employing the SBM-TE to explain the intellectual capital and efficiency nexus, as well as, testing for both beta-convergence and sigma-convergence.

Keywords: Non-radial technical efficiency; Slacks; Credit risk; Intellectual capital; Data envelopment analysis; Emerging markets; Convergence (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:jes-06-2019-0295

DOI: 10.1108/JES-06-2019-0295

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