Determinants of Intellectual Capital Performance of Banks in Africa: Evidence from Ghana, Nigeria, South Africa and Kenya

Abstract

In public lectures, managers usually sing the chorus that employees are their most valued asset, however, the value of these same employees are not captured on their statement of financial position arguing that finding an appropriate measure to recognise intellectual capital has always been a herculean task. As this subject matter is crucial in re-echoing the importance of human capital to companies, the study seeks to examine determinants of intellectual capital performance of banks in the Sub-Saharan Africa from 2016 to 2020. Adopting the multiple regression technique in analysing the data sourced from the individual banks financial reports revealed that bank profitability and efficiency of human capital investment are positively related to intellectual capital performance. However, the impact of bank size on intellectual capital performance was negative. Aside these, all the other variables were not significant in explaining banks intellectual capital performance. It is therefore, recommended that the human capital of banks be evaluated to identify those which are underperforming to either retrained or replaced. Most importantly, top managers who suffer from the “peter principle” should be identified and replaced with high performing managers to efficiently coordinate the tangible and the intangible resources in order to achieve greater value.

Keywords: Intellectual capital performance, Human capital, VAIC, Sub-Saharan Africa

DOI: 10.7176/RJFA/13-18-02

Publication date:September 30^th 2022