ABSTRACT
In recent times a new high technology, information, and innovation based environment has
gradually taken the centre stage in the global economy. Under the new dispensation,
knowledge, ability, skills, experience and attitude of workers, assume greater significance
even as organizations use intellectual capital as a critical resource to enhance their
performances. Consequent upon this, service firms as well as manufacturing organisations
use intellectual capital with their physical assets to sharpen their competitive edge while
organizations which have managed their intellectual capital better, are observed to have
achieved stronger competitive advantage than the general enterprises. Following from above,
it is expected that there should be a positive relationship between intellectual capital and
financial performance. Empirical records of studies on this relationship in some developed
nations showed divergent views.
Unfortunately, no empirical records on the relationship of
intellectual capital and financial performance in the Nigeria Banking sector exist. This study
had the broad objective of using the Value Added Intellectual Coefficient (VAIC) model to
investigate if there is a positive and significant relationship between the Intellectual Capital
indices (such as Human Capital Efficiency, Structural Capital Efficiency and the Capital
Employed Efficiency) and financial performance variables (which included Return on
Assets, Return on Equity, Employee productivity, Growth in Revenue and Market to book
value ratio) of selected banks in Nigeria. The study adopted the ex-post facto research design.
It was systematically conducted using longitudinal time series data generated from the
Nigeria Stock Exchange and from annual reports and accounts of the selected banks in
Nigeria spanning from year 2000 to 2011. The hypotheses of the study were: (i) The indices
of the value added intellectual coefficient of a bank do not positively and significantly affect
the bank’s Return on Assets (ROA). (ii) The indices of the value added intellectual
coefficient of a bank, do not positively and significantly affect the bank’s Return on Equity
(ROE). (iii) The indices of the value added intellectual coefficient of a bank, do not
positively and significantly affect the Employee Productivity (log EP) of the bank. (iv) The
indices of the value added intellectual coefficient of a bank, do not positively and
significantly affect the bank’s Growth in Revenue (GR). (v) The indices of the value added
intellectual coefficient of a bank, do not positively and significantly affect the bank’s Market
to Book value ratio (MB). The dependent variables were: (i) Return on Assets, (ii) Return on
Equity, (iii) Employee Productivity, (iv) Growth in Revenue, (v) Market to book value ratio;
while the independent variables were the components of Value Added Intellectual Capital
{Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE) and the Capital
Employed Efficiency (CEE)}. The multiple regression analysis method was adopted for the
test of all the hypotheses.
