IDEAS home Printed from https://ideas.repec.org/a/rbs/ijbrss/v11y2022i4p183-192.html
   My bibliography  Save this article

The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh

Author

Listed:
  • Changjun Zheng

    (School of Management, Huazhong University of Science and Technology (HUST) 1037 Luoyu Road, Hongshan District, Wuhan 430074, P.R. China.)

  • Md Nazmul Islam

    (School of Management, Huazhong University of Science and Technology (HUST) 1037 Luoyu Road, Hongshan District, Wuhan 430074, P.R. China.Department of Accounting, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902,Bangladesh)

  • Md Nazmus Sadekin

    (Department of Economics, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902,Bangladesh)

  • Syed Moudud Ul Huq

    (Department of Accounting, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902,Bangladesh)

Abstract

The main purpose of this study is to identify the impact of intellectual capital efficiency (ICE) also known as knowledge capital along with its components human capital efficiency (HCE) and structural capital efficiency (SCE) on bank risk-taking behavior in Bangladesh. To reveal this effect, the study uses generalized method of moment (GMM) estimator and Two Stages Least Square estimator (to check the Robustness) and unbalanced panel data of 32 commercial banks of Bangladesh consisting of 530 bank-year observations during the year 2003-2020. The main results of the study are: (a) ICE is significantly and positively connected with a bank’s credit risk which indicates credit risk grows up with the increase of Intellectual capital efficiency, and (b) Both the human capital efficiency and structural capital efficiency positively impacts credit risk but the impact of SCE is not significant as HCE, (c) Bank performance (ROA), RWATA, macro variable inflation, and size have a negative impact on bank risk whereas ID and GGDP insignificant positively impact on bank’s risk. Finally, the results of the study will assist the stakeholders, policymakers, and academicians for future research. Key Words:Bank Performance; Bank Risk; Commercial Bank; Credit Risk; Intellectual capital; Bangladesh.

Suggested Citation

  • Changjun Zheng & Md Nazmul Islam & Md Nazmus Sadekin & Syed Moudud Ul Huq, 2022. "The Impact of Intellectual Capital on Bank Risk: Evidence from Banking Sectors of Bangladesh," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(4), pages 183-192, June.
    • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:4:p:183-192
    DOI: 10.20525/ijrbs.v11i4.1777
    as

    Download full text from publisher

    File URL: https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/1777/1291
    Download Restriction: no
    File URL: https://doi.org/10.20525/ijrbs.v11i4.1777
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijrbs.v11i4.1777?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nasif Ozkan & Sinan Cakan & Murad Kayacan, 2017. "Intellectual capital and financial performance: A study of the Turkish Banking Sector," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 17(3), pages 190-198, September.
    2. Zhang, Jianhua & Jiang, Chunxia & Qu, Baozhi & Wang, Peng, 2013. "Market concentration, risk-taking, and bank performance: Evidence from emerging economies," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 149-157.
    3. Fiordelisi, Franco & Marques-Ibanez, David & Molyneux, Phil, 2011. "Efficiency and risk in European banking," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1315-1326, May.
    4. Meslier, Céline & Tacneng, Ruth & Tarazi, Amine, 2014. "Is bank income diversification beneficial? Evidence from an emerging economy," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 97-126.
    5. Emilia Peni & Sami Vähämaa, 2012. "Did Good Corporate Governance Improve Bank Performance during the Financial Crisis?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 41(1), pages 19-35, April.
    6. Tan, Yong & Floros, Christos, 2013. "Risk, capital and efficiency in Chinese banking," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 378-393.
    7. Robert Isaac & Irene Herremans & Theresa Kline, 2010. "Intellectual Capital Management Enablers: A Structural Equation Modeling Analysis," Journal of Business Ethics, Springer, vol. 93(3), pages 373-391, May.
    8. Simon Kwan & Robert Eisenbeis, 1997. "Bank Risk, Capitalization, and Operating Efficiency," Journal of Financial Services Research, Springer;Western Finance Association, vol. 12(2), pages 117-131, October.
    9. Changjun Zheng & Anupam Das Gupta & Syed Moudud-Ul-Huq, 2018. "Effect of Human Capital Efficiency on Bank Risk-Taking Behavior and Capital Regulation: Empirical Evidence from a Developing Country," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(2), pages 231-247.
    10. Lee, Tung-Hao & Chih, Shu-Hwa, 2013. "Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 705-724.
    11. Changjun Zheng & Anupam Das Gupta & Syed Moudud-Ul-Huq, 2018. "Do Human Capital and Cost Efficiency Affect Risk and Capital of Commercial Banks? An Empirical Study of a Developing Country," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(1), pages 22-37, January.
    12. Tara Deelchand & Carol Padgett, 2009. "The Relationship between Risk, Capital and Efficiency: Evidence from Japanese Cooperative Banks," ICMA Centre Discussion Papers in Finance icma-dp2009-12, Henley Business School, University of Reading.
    13. Aebi, Vincent & Sabato, Gabriele & Schmid, Markus, 2012. "Risk management, corporate governance, and bank performance in the financial crisis," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3213-3226.
    14. Lee, Chien-Chiang & Hsieh, Meng-Fen, 2013. "The impact of bank capital on profitability and risk in Asian banking," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 251-281.
    15. Claudia Girardone & Philip Molyneux & Edward Gardener, 2004. "Analysing the determinants of bank efficiency: the case of Italian banks," Applied Economics, Taylor & Francis Journals, vol. 36(3), pages 215-227.
    16. Muhammad Haris & Hongxing Yao & Gulzara Tariq & Hafiz Mustansar Javaid & Qurat Ul Ain, 2019. "Corporate Governance, Political Connections, and Bank Performance," IJFS, MDPI, vol. 7(4), pages 1-37, October.
    17. Maria Chiara Demartini & Valentina Beretta, 2022. "Intellectual capital in SMEs: a review and research agenda," International Journal of Learning and Intellectual Capital, Inderscience Enterprises Ltd, vol. 19(1), pages 5-29.
    18. Mr. Martin Cihak & Mr. Klaus Schaeck, 2007. "Banking Competition and Capital Ratios," IMF Working Papers 2007/216, International Monetary Fund.
    19. Yener Altunbas & Santiago Carbo & Edward P.M. Gardener & Philip Molyneux, 2007. "Examining the Relationships between Capital, Risk and Efficiency in European Banking," European Financial Management, European Financial Management Association, vol. 13(1), pages 49-70, January.
    20. Chaibi, Hasna & Ftiti, Zied, 2015. "Credit risk determinants: Evidence from a cross-country study," Research in International Business and Finance, Elsevier, vol. 33(C), pages 1-16.
    21. Muhammad Imran Nazir & Yong Tan & Muhammad Rizwan Nazir, 2021. "Intellectual capital performance in the financial sector: Evidence from China, Hong Kong, and Taiwan," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6089-6109, October.
    22. Andrea Guerrini & Giulia Romano & Chiara Leardini, 2014. "Does intellectual capital efficiency affect financial performance? The case of Italian listed firms," International Journal of Learning and Intellectual Capital, Inderscience Enterprises Ltd, vol. 11(2), pages 127-148.
    23. Changjun Zheng & Anupam Das Gupta & Syed Moudud-Ul-Huq, 2018. "Do Human Capital and Cost Efficiency Affect Risk and Capital of Commercial Banks? An Empirical Study of a Developing Country," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(1), pages 22-37.
    24. Abdulelah Alrashidi & Omar Alarfaj, 2020. "The Impact of Intellectual Capital Efficiency on Bank Risks: Empirical Evidence from the Saudi Banking Industry," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 206-214.
    25. Changjun Zheng & Anupam Das Gupta & Syed Moudud-Ul-Huq, 2018. "Effect of Human Capital Efficiency on Bank Risk-Taking Behavior and Capital Regulation: Empirical Evidence from a Developing Country," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(2), pages 231-247, February.
    26. Sun, Lei & Chang, Tzu-Pu, 2011. "A comprehensive analysis of the effects of risk measures on bank efficiency: Evidence from emerging Asian countries," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1727-1735, July.
    27. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    28. Muhammad Haris & HongXing Yao & Gulzara Tariq & Ali Malik & Hafiz Mustansar Javaid, 2019. "Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan," JRFM, MDPI, vol. 12(2), pages 1-26, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Afsana Yesmin, 2018. "Do competition and development indicators heterogeneously affect risk and capital? Evidence from Asian banks," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 1-18, September.
    2. Syed Moudud-Ul-Huq, 2019. "Banks’ capital buffers, risk, and efficiency in emerging economies: are they counter-cyclical?," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(4), pages 467-492, December.
    3. Syed Moudud-Ul-Huq, 2021. "The Impact of Business Cycle on Banks’ Capital Buffer, Risk and Efficiency: A Dynamic GMM Approach from a Developing Economy," Global Business Review, International Management Institute, vol. 22(4), pages 921-940, August.
    4. repec:spt:apfiba:v::y:2018:i::f:8_2_3 is not listed on IDEAS
    5. Changjun Zheng & Niluthpaul Sarker & Shamsun Nahar, 2018. "Factors affecting bank credit risk: An empirical insight," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 8(2), pages 1-3.
    6. Tan, Yong & Anchor, John, 2017. "The impacts of risk-taking behaviour and competition on technical efficiency: Evidence from the Chinese banking industry," Research in International Business and Finance, Elsevier, vol. 41(C), pages 90-104.
    7. Changjun Zheng & Anupam Das Gupta & Syed Moudud-Ul-Huq, 2017. "Do market competition and development indicators matter for banks’ risk, capital, and efficiency relationship?," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 4(02n03), pages 1-27, June.
    8. Ding, Dong & Sickles, Robin C., 2018. "Capital Regulation, Efficiency, and Risk Taking: A Spatial Panel Analysis of U.S. Banks," Working Papers 18-004, Rice University, Department of Economics.
    9. Thanh Pham Thien Nguyen & Son Hong Nghiem & Eduardo Roca, 2016. "Management Behaviour in Vietnamese Commercial Banks," Australian Economic Papers, Wiley Blackwell, vol. 55(4), pages 345-367, December.
    10. Paraskevi Katsiampa & Paul B. McGuinness & Jean-Philippe Serbera & Kun Zhao, 2022. "The financial and prudential performance of Chinese banks and Fintech lenders in the era of digitalization," Review of Quantitative Finance and Accounting, Springer, vol. 58(4), pages 1451-1503, May.
    11. Syed Moudud-Ul-Huq & Rabaka Akter & Tanmay Biswas, 2020. "Impact of Financial Crisis on Credit Risk: Pre- and Post-financial Crises 
in an Emerging Economy," FIIB Business Review, , vol. 9(2), pages 118-132, June.
    12. Do Van Anh,, 2022. "Does better capitalization enhance bank efficiency and limit risk taking? Evidence from ASEAN commercial banks," Global Finance Journal, Elsevier, vol. 53(C).
    13. Ghosh, Saibal, 2018. "Bad luck, Bad policy or Bad banking? Understanding the financial management behavior of MENA banks," Journal of Multinational Financial Management, Elsevier, vol. 47, pages 110-128.
    14. Phan, Hien Thu & Anwar, Sajid & Alexander, W. Robert J. & Phan, Hanh Thi My, 2019. "Competition, efficiency and stability: An empirical study of East Asian commercial banks," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    15. Changjun Zheng & Mohammed Mizanur Rahman & Munni Begum & Badar Nadeem Ashraf, 2017. "Capital Regulation, the Cost of Financial Intermediation and Bank Profitability: Evidence from Bangladesh," JRFM, MDPI, vol. 10(2), pages 1-24, April.
    16. Zheng, Changjun & Moudud-Ul-Huq, Syed & Rahman, Mohammad Morshedur & Ashraf, Badar Nadeem, 2017. "Does the ownership structure matter for banks’ capital regulation and risk-taking behavior? Empirical evidence from a developing country," Research in International Business and Finance, Elsevier, vol. 42(C), pages 404-421.
    17. Ikram Ullah Khan & Sadaqat Ali & Habib Nawaz Khan, 2018. "Market Concentration, Risk-taking, and Efficiency of Commercial Banks in Pakistan: An Application of the Two-Stage Double Bootstrap DEA," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(2), pages 65-96, June.
    18. Francesca Pampurini & Anna Grazia Quaranta, 2018. "Sustainability and Efficiency of the European Banking Market after the Global Crisis: The Impact of Some Strategic Choices," Sustainability, MDPI, vol. 10(7), pages 1-16, June.
    19. Changjun Zheng & Syed Moudud-Ul-Huq, 2017. "Banks’ capital regulation and risk: Does bank vary in size? Empirical evidence from Bangladesh," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 4(02n03), pages 1-27, June.
    20. Safiullah, Md, 2020. "Bank governance and crisis-period efficiency: A multinational study on Islamic and conventional banks," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    21. Biswa Swarup Misra & Paolo Coccorese, 2022. "Market power, efficiency and stability of Indian banks," Economic Change and Restructuring, Springer, vol. 55(4), pages 2263-2292, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijbrss:v:11:y:2022:i:4:p:183-192. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.