Effects of Intellectual Capital Cost on Performance of Selected deposit Money Banks Quoted in Nigeria

Oyemolu Olugbenga Akinsulire
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Oyemolu Olugbenga Akinsulire: Babcock University, Nigeria

International Journal of Research and Innovation in Social Science, 2022, vol. 6, issue 5, 834-844

Abstract: The lack of consensus in reporting on the impact of intellectual capital cost on overall organizational value necessitated the current study. The purpose of this research paper is to explore the effect of intellectual capital (IC) and its various components on the financial and market performance of Nigerian Deposit Money Banks (DMBs). Data for the study were extracted from the audited financial statements of Deposit Money Banks (DMBs) listed on the Nigerian Exchange over a ten-year period (2011-2020) as at 31st December 2020, and independent variables derived from Public’s (2000) Modified Value-Added Intellectual Capital Adequacy Ratio (MVAICAR) components were regressed against dependent bank performance metrics (Return on Assets (ROA) and Market to Book value of equity proxy by Tobin’s Q (TQ). Expo facto design was employed and the multiple regression technique was used to determine the existence of relationship between the variables. Human Capital Adequacy Ratio (HCAR), Relational Capital Adequacy (RCAR), and Capital Employed Adequacy Ratio (CEAR) were all positively and significantly related to ROA (P=0.000,0.000,0.0400 =0.003,0.439,0.067 at 5 percent significant level), whereas Structural Capital Adequacy Ratio (SCAR) was positively related but insignificant (P=0.130 =0.011at 5 percent). HCAR and RCAR, on the other hand, were favorably and considerably associated to Tobin’s Q (P=0.001,0.0.009=5.03,3.31 at 5 percent significance level), whereas CEAR and SCAR were positive but negligible (P=0.972,0.644=0.04,0.48 at 5 percent significance level). The findings from the study revealed that investing in overall intellectual capital components have a positive and significant effect on the financial and market performance of Nigerian Deposit Money Banks and recommend that regulators should incorporate Intellectual Capital investment as part of the framework for improving and reinforcing banks reporting system on performance and value.

Date: 2022
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