Intellectual capital and bank profitability: Evidence from conventional and Islamic bank in Indonesia
Journal Title: Jurnal Keuangan dan Perbankan - Year 2019, Vol 23, Issue 2
Abstract
This study investigates the effect of intellectual capital on bank profitability. In addition, we also analyze the effect of intellectual capital on bank profitability based on bank types, conventional and Islamic bank. Our data consist of conventional and Islamic banks operated in Indonesia from 2010 to 2016 annually. Since our data are a panel, we employ panel regression. Intellectual capital is measured by using Value Added Intellectual Capital (VAIC). Our result shows that intellectual capital has a positive significant impact on bank profitability. After data classified based on bank types, intellectual capital only has a positive significant effect on conventional bank profitability. We also attempt to estimate the impact of VAIC components, such as Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE) and Capital Employed Efficiency (CEE), on bank profitability. The results show that the impact of HCE is strongly significant in both banks. However, CEE and SCE do not have a significant effect on both types of bank profitability. Our results indicate that conventional banks synergize their intellectual and physical capital in creating profit better than Islamic banks. Thus, this research could be a critique of the Indonesian Islamic banking industry in determining and overcome their weakness.
Authors and Affiliations
Danes Quirira Octavio, Yuli Soesetio
Keywords
Related Articles
- EP ID EP661715
- DOI 10.26905/jkdp.v23i2.3028
- Views 126
- Downloads 0
The Determinants of Dividend Policy: A Study of Financial Industry in Indonesia
Dividend policy is still a controversial issue and often debated in the literature of corporate finance. Previous literature has examined that companies pay a dividend is to attract investors to buy their companies share...
Households, Financial Distress, and Predatory Lending: An Experimental Study
A substantial part of households and micro enterprises, particularly in developing countriesincluding Indonesia, did not have access to formal financial institutions which thenlead them to borrow money from illegal loan...
LOYALITAS NASABAH DAN KINERJA PERBANKAN DI INDONESIA
The purpose of this study was to investigate the impact of customer loyalty on firm performance in the banking industry in Indonesia. This study used a sample of banking firms listed on the Indonesian Stock Exchange. The...
Controlling shareholders, audit committee characteristics, and related party transaction disclosure: Evidence from Indonesia
The disclosure of related party transactions was required in the financial statements because it is potentially misused by controlling shareholders. This study aims to examine controlling shareholders, audit committee ch...
The determinant factors of efficiency on Islamic banking and conventional banking in Indonesia
As intermediary institutions, conventional banks have larger amount of loans to third party funds than of Sharia banks. Thus, the bank needs a performance appraisal to measure banking operations through efficiency. We ex...