Revisiting the Nexus Between Intellectual Capital and Performance of BRICS Financial Sector

Abstract

The study tends to evaluate the intellectual capital (IC) performance of BRICS' banks over the period of 2010 to 2014 using the Value-Added Intellectual Capital (VAIC™) typology developed by Ante Pulic (1998, 2000). A micro panel data on IC, ROA, EPS and VA growth was calculated from consolidated annual reports of 29 publically listed banks. They result of the study shed light that in all banks human capital efficiency is an important determinant for measuring the IC performance of banks compare to structural and physical capital efficiency. In addition, this study also ranks the banks based on VAIC™ and VA performance. In case of empirical results of the study, it explains a positive and significant relationship of human capital efficiency and structural capital efficiency (SCE) with VA growth whereas capital employed efficiency is not significantly related with VA growth. Moreover, results of the study found a positive and significant connection between VAIC™ and VA growth. However, this study fails to find any significant relationship of ROA and EPS with IC. Hence, this study is novel attempt in context of BRICS banking sector which implies that VAIC™ is the most robust methodology for evaluating the IC performance and its relationship with VA growth. Future research is required on large scale longitudinal data using panel data analysis in order to expand its generalizability.