Intellectual Capital and Performance of Banking and Financial Institutions in Panama: An Application of the VAIC™ Model

Oriana Jannett Pitre-Cedeño and Edila Eudemia Herrera-Rodríguez ()
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Oriana Jannett Pitre-Cedeño: Universidad de Panamá, Panamá City 06001, Panama
Edila Eudemia Herrera-Rodríguez: Universidad de Panamá, Panamá City 06001, Panama

JRFM, 2024, vol. 17, issue 9, 1-17

Abstract: In the knowledge era, intellectual capital has been considered a key factor in creating value within organisations. This study examines the relationships and interactions between the components of intellectual capital and the profitability of Panamanian banking and financial institutions listed on the Latin American Stock Exchange (LATINEX) from 2014 to 2020. A theoretical framework based on agency theories, signalling theory, and stakeholder theory was employed to support the results. The Valued-Added Intellectual Coefficient (VAIC)™ model, which evaluates the intellectual capital of organisations based on information from financial statements, was also utilised. In this study, stepwise regression was applied to select the optimal number of predictors to be included in each multiple regression model to examine the relationship between the return on equity (ROE) and the components of the VAIC™ in addition to control variables such as size and indebtedness. The findings confirm this study’s hypothesis, demonstrating that the structural capital efficiency (SCE) and company size (SIZE) variables explain 57% of the variance in the ROE for the analysed institutions. The results suggest that the intellectual capital (IC) of financial sector institutions listed on LATINEX is significantly influenced by the SCE coefficient, which shows a negative relationship, suggesting that investment in structural capital does not enhance profitability. On the other hand, larger institutions exhibited higher profitability during the study period. This study was limited to the analysis of two sectors: banking and finance in companies listed on LATINEX. However, its rigorous theoretical and empirical foundation opens the way for future research in which other sectors can be considered, and cross-country comparisons can be made, strengthening the research in this field for Latin America. At the same time, this study offers market regulators a scientific methodology to oversee the activities of issuing companies.

Keywords: intellectual capital; return on equity; added value of intellectual capital; Latin American Stock Exchange (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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