Intellectual capital and bank's managerial efficiency to use inputs to generate outputs

What is it about?

The few studies that investigated how the knowledge-base of banks affect their managerial efficiency used a radial model to measure technical efficiency which does not account for inefficiencies in the use of inputs and outputs by managers. The current study used a robust measure of managerial efficiency known as slack-based technical efficiency. Poor performing banks utilise the technologies and processes of efficient banks which leads to convergence over time. Listed banks and local banks are fast in copying the technologies of others. The results suggest that for banks in emerging economies, intellectual capital which is mainly driven by the skills of employees increases technical efficiency. This relationship is strong in the case of non-listed banks and foreign banks. Banks are advised to invest in value-adding emerging technologies and their employees so as to enhance their efficiency. The study offers insights for policymakers, practitioners and future researchers in the banking sector of emerging economies.

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Photo by Adeolu Eletu on Unsplash

Photo by Adeolu Eletu on Unsplash

Why is it important?

The study explains the relationship to provide clarity on what bank managers and other stakeholders need to look out for, when aiming to increase managerial performance.

Perspectives