Mediating Role of Intellectual Capital Efficiency in Capital Structure and Financial Performance of Quoted Banks of Pakistan

Abstract

Purpose: The main purpose of this research paper is to investigate the relationship between intellectual capital, capital Structure and corporate financial performance in banks listed at KSE (Karachi stock exchange) and also to find the impact of capital structure and intellectual capital efficiency on financial performance of quoted banks in Pakistan.

Design/methodology/approach: Structural Equation Modeling (SEM) is applied to find the association between latent constructs and to find their impact of financial performance of the banks in Pakistan. For this study required data is obtained from 2006-2010 audited annual reports of the corporations.

Findings: This study empirically shows that the capital structure through intellectual capital efficiency has a significant relationship with financial performance measures of the corporations as a whole in case of the listed banks at KSE, Pakistan.

Practical implications: This empirical study gives a new insight in intellectual capital and capital structure for companies to enhance their financial performance.

Originality/value: This study is the first of its own nature that measures the relationship between capital structures, intellectual capital and corporate financial in the world of research generally and in case of banks listed on KSE Pakistan specifically.

Keywords: Capital Structure, corporate financial performance, Pakistan.

Paper Type: Research paper.