Areview of the Research article;

Intellectual capital and bank productivity in emerging markets: evidence from Ghana
Introduction/ Background
• Alhassan & Asare (2016) conducted a study on Intellectual capital and bank
productivity in emerging markets: evidence from Ghana .
• According to them ,intellectual capital appears to be vital for decision
making both within the firm and for external stakeholders; and have
implications on productivity
• Banks are the most dominated financial service sector and as recognized as
an intellectual capital intensive industry sector (Branco et al., 2011) which
makes the recognition and development of intellectual capital an important
aspect of bank management.
• The study indicated , although there are theoretical and empirical linkages
between firm performance and intellectual capital, there have been few
attempts to study whether intellectual capital is linked to variations in
productivity
• Based on this background, this study sought to expand the literature on
intellectual capital and performance from the perspective of an em
• erging banking market.
Methodology

• The study examined the effect of intellectual capital on

productivity in Ghana.
• The data from the study was sourced from the Banking
Supervision Department of the Bank of Ghana and covered
annual financial statement from2003-2011.
• The final sample used for the study included 18 out of the 27
banks with available data for all the nine year study period
Three-Stage Empirical Strategy Employed In Testing Our Hypothesis . Stage 1
• The study used a 3 stage empirical strategy in testing their
hypothesis.
• The first stage used the annual data on 18 banks from 2003-2011
which employed the Value Added Intellectual Coefficient(VAIC)(2) of
Pulic (1998,2001) to estimate intellectual capital performance. The
VAIC method which assessed the Intellectual capital is vital for value
creation in organisations and made up of the sums of (HCE,SCE, and
CEE). HCE is the value added by investments in employees and
related capabilities. SCE is the use of structural capital in adding
value to the firm. CEE also measured the value addition made by
capital invested by shareholders.
Stage 2

• The second stage , estimated bank productivity using

Malmquist Productivity Index which measured productivity
changes over time periods. Index which measured productivity
changes over different time periods. The index was made up
of technological changes and efficiency changes
• Technological changes reflects improvements in performance
driven by new product developments and innovations. The
eficiency changes is decomposed into pure efficiency change
and scale efficiency under assumptions of variable returns to
scale.
Stage 3

• The third stage examined the effect of intellectual capital and

other contextual variables on bank productivity using panel
regression analysis
Findings

The VAIC had significant positive relationship with all three

proxies of bank productivity in MPI, efficiency change and
technical change which were in line with the finding of Bollen et
al. (2005), and Chen et al. (2014) which indicated that
intellectual capital underlines the progress in banks technical
change, which reflects innovative investments in technology to
enhance productivity. This strengthens the importance of
intellectual capital of banks in improving their innovative
capabilities to drive productivity and invariably increase profits.
Findings

• The study found HCE to have a significant positive relationship

with productivity growth, efficient change and technical
change which suggested that the value added effect of human
capital investments improves bank productivity.
• For SCE,did not have any significant impact on bank
productivity.
Conclusion

• The study showed that on a whole, intellectual capital had a

positive effect on bank productivity thus investing more in it
will lead to high bank productivity. A regression analysis on the
independent variable(intellectual capital) went further to
show that human capital efficiency and capital employed
efficiency produces the most effect on bank productivity