Human Capital and its Impact on Banking Financial Performance

Abstract

The importance of human capital has been increased during the last period because many financial institutions and banks faced a lot of problems. The reason of facing these problems or crises is that those companies had a lack of trained and professional staff. So, banks around the globe noticed this problem and tried very hard to attract the well trained employees and improve their employees’ skills.

This study examines the impact of human capital on banking financial performance for Jordan Islamic Bank (JIB) during 2000 – 2014. The Dependent variable is financial performance which was presented by net income, return on assets, and return on equity. Meanwhile, the independent variable is human capital which was measured by number of employees, number of branches and offices, number of courses and seminars, and finally number of the participants in the courses and seminars.

The researchers found a positive and significant relationship between net income and number of employees, but the relationship between net income and number of branches and offices was negative and significant. Also, the researchers found the relationships between net income and each of number of courses and seminars, and number of participants in courses and seminars were not significant which indicate that focusing on the quality not such on the number of courses.

In addition, we found a negative and significant relationship between return on assets and number of branches. On the other hand, we did not find a significant relationship between return on assets and each of number of employees, courses and seminars, and participants in courses and seminars.

Unfortunately, the researchers found not significant relationships between return on equity on one hand, and every proxy of the independent variables.

Keywords: human capital, banking financial performance, Islamic banks, and Jordan.