VAIC and Firm Performance: Banking Sector Of Pakistan

Abstract

Objective of this study is to examine the efficiency of the commercial banks of Pakistan in utilizing intellectual capital and capital employed to run the organization. For this purpose Ante Pulic’s VAIC tool was used to measure the intellectual capital efficiency and capital employed efficiency. The regression results have also proven that there is significant relationship between the intellectual capital and organizational performance. But public owned banks are not utilizing their intellectual capital optimally. Results has shown that for Govt. owned banks VAIC has positive impact over profitability (ROA and ROE) but no relationship between VAIC and productivity (ATO). At the same time for the Private owned banks VAIC has significant relationship and impact on both profitability and productivity.

Keywords: Comparison of Public and Private Banks of Pakistan, Value Added intellectual capital, Intellectual capital Efficiency, Capital employed efficiency.