Intellectual Capital and Its influence on the Financial Performance

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1 ASA University Review, Vol. 5 No. 1, January June, 2011 Intellectual Capital and Its influence on the Financial Performance Abstract Rubina Afroze * This study aims to identify the influence of Intellectual Capital (IC) on the financial performance of 13 private commercial banks (PCBs) of Bangladesh listed with Dhaka Stock Exchange. Based on the empirical data of drawn from the annual reports of these banks, IC efficiency scores (,,, and ) were measured using Value Added Intellectual Coefficient () Method and financial performance indicators (e.g., ROE, ROA, EPS, Cost Income Ratio, Credit Deposit Ratio, and Financial Leverage) were calculated and analyzed in this study. The empirical findings of this study show statistically significant correlation among the IC efficiency scores and financial performance indicators, in addition to the statistically significant influence of IC on the financial indicators. Keywords: Intellectual Capital, Private Commercial Bank,,,,, Financial Performance, Dhaka Stock Exchange, Bangladesh Introduction In today s new economy, companies do not primarily invest in fixed assets, but in intangible assets that plays an important role in determining the value of a company. The present corporate performance measurement system is heavily inclined towards financial and physical aspects of the company and thus lacks relevant information regarding the performance of the intangible assets or intellectual capital efficiency. As a result, knowledge on the impact of intellectual capital over the corporate performance measurement system or the overall performance of the company is insufficient. This study gives the valuable insight on the impact of intellectual capital over the financial performance of the selected private commercial banks and helps to understand the above-mentioned knowledge-gap in Bangladesh perspective. Literature Review Intellectual Capital: The Definition Generally, Intellectual Capital (IC) is defined as creative abilities of human brain or mind. Edvinson and Malone (1997) defined IC as knowledge that can be converted into value. They further explain difference of market value and book value as value of IC. Stewart (1997) viewed IC as knowledge, information, intellectual property and expertise that can be put to use to create wealth. While Bontis et.al. (2000) explain IC as individual workers' and organizational knowledge that contribute to sustainable competitive advantage. He further elaborates that IC in broad sense consists of human capital and structural capital. While Pulic (2000) includes all * Lecturer, Faculty of Business, ASA University Bangladesh

2 162 ASA University Review, Vol. 5 No. 1, January June, 2011 employees and their abilities that create value addition. Moore (1996) defines IC as customer capital, innovation capital and organizational capital. On the other side of the fence, Blair and Wallman (2001) perceive that it is difficult to provide precise definition for intangible assets as well as IC. Theoretical Foundations of Intellectual Capital Measurement There are two major schools of thoughts that explain Intellectual Capital concepts first focuses on cost and tries to compute the IC through the difference between market and book value, whereas second school is value oriented and focuses to measure IC efficiency through value addition by human and structural capital. Under these schools, a large number of Intellectual Capital measurement methods have been developed. However, only few of these methods provide opportunities for empirically linking the value of Intellectual Capital to firm performance considering the fact that the measurement of Intellectual Capital is both difficult and expensive due to information collection, processing and dissemination costs. Intellectual Capital Performance Studies The influence of Intellectual Capital on the financial performance was found by Youndt (1998), Bontis (1998), Bontis et.al (2000), Reed (2000), Walker (2001) and Shook (2002) cited in Ismail and Songip, Similar findings is also found by Firer and Stainbank (2003) for companies of South Africa; Riahi-Belkaoui (2003) for multi-national companies in the United States of America; Mind, Shu and Yuhchang (2005) for listed companies in Taiwan; Ji-jian, Nai-ping and Yu-sheng (2006) for Chinese Securities Market; Muhammad, Isa and Ismail (2006) for 18 financial companies (e.g., bank insurance and security brokerage firms) listed in Bursa Malaysia; Huang & Hsueh (2007) for engineering consulting firms of Taiwans; Iswatia & Anshoria (2007) for insurance companies listed in Jakarta Stock Exchange; Cabrita and Vaz (2008 cited in Ismail and Songip, 2008) for Portuguese banking industry. Although a good number of researches on intellectual capital and its impact on financial performance of a company are available in different country or market perspective, only few are done in the context of Bangladesh. Using data drawn from 22 Bangladeshi banks enlisted in the Dhaka Stock Exchange, Najibullah (2005) in an unpublished internship report failed to prove of having strong relationship between the corporate value creation efficiency and firms market-tobook value ratios. He also did not find any strong association between intellectual capital and firms financial performance. In a study Mohiuddin, Najibullah and Shahid (2006) showed the performance of these banks during through Value Added Intellectual Coefficient () method based on the data drawn from 17 banks operating in Bangladesh. Hussain, Chakraborty, and Rahman (2010) found marginal evidence regarding the significance of intellectual capital in influencing market value and financial performance of firms in Bangladesh by using data drawn from 11 banking institutions, 10 textile firms and 9 pharmaceutical companies enlisted in the Dhaka Stock Exchange, Bangladesh. Besides these, some articles are also found regarding the IC disclosure practices in Bangladesh context.

3 Intellectual Capital and Its influence on the Financial Performance 163 Objective of the Study This major objectives of this study is to measure Intellectual Capital (IC) Performance of private commercial banks (PCBs) through Value Added Intellectual Coefficient () method, to measure selected financial performance indicators, and also to identify the influence of Intellectual Capital (IC) on the financial performance of these banks. Methodology followed for the Study Research Framework The approach undertaken by the researcher for this study is exploratory in nature. The researcher used the correlation analysis to check linear relationship between the variables and t-test for testing different hypotheses constructed in the subsection Tested Hypotheses for analyzing statistical relationship between the various scores of intellectual capital and indicators for financial performance. The conceptual frameworks used in this study to test the relationship between the variables are shown in the following diagram: Human Capital Efficiency () Capital Employed Efficiency () Value Added Intellectual Coefficient () Financial Performance of Banks (e.g., ROA, ROE, EPS, C/I Ratio, C/D Ratio, Financial Leverage) Structural Capital Efficiency () Research Population & Sample The research population for this study is all 30 private commercial banks listed in Dhaka Stock Exchange (DSE) operating in Bangladesh. Of them, 13 banks are selected as sample based on the availability of the pertinent data for the last 12 years ( ). The sample banks are ICB Islamic Bank, IFIC Bank, Prime Bank, Islami Bank Bangladesh, Uttara Bank, Pubali Bank, National Bank, The City Bank, AB Bank, Eastern Bank, Dhaka Bank, Southeast Bank, and Al Arafa Islami Bank. Data Collection and Data Analysis All data used in the research are manually extracted from the annual reports of the respective banks by the researcher. To derive the indicators, the researcher did necessary calculation using formulas shown in the subsection Variable Used in the Study and also performed different statistical tests and analysis using MS Excel 2007, SPSS 16, and Minitab 14.

4 164 ASA University Review, Vol. 5 No. 1, January June, 2011 Variable Used in the Study Basically, two types of variables are used in this research one for measuring intellectual capital and the other for measuring financial performance of the sample banks. The variables of the first set are Value Added Intellectual Coefficient (), Human Capital Efficiency (), Capital Employed Efficiency (), and Structural Capital Efficiency () and for the second set are Return on Equity (ROE), Return on Assets (ROA), Earnings per Share (EPS), Cost Income Ratio (C/I), Credit Deposit Ratio (C/D), and Financial Leverage (FL). The author used Value Added Intellectual Coefficient () method developed by Pulic (1998) to measure the efficiency coefficient of the intellectual capital. is an analytical procedure that is designed to enable management, shareholders and other relevant stakeholders to effectively monitor and evaluate the efficiency of value added (VA) by a company s total resources and each major resource component. Formally, is a composite sum of three separate indicators: 1) Capital Employed Efficiency (), 2) Human Capital Efficiency (), and 3) Structural Capital Efficiency (). The formulae used for calculating the are shown below: Output = Total Operating Income Input = Operating Expenses (excluding Personnel Costs) Value Added (VA) = Output Input HC = Personnel Cost, considered as an investment CE = Capital Employed (both Physical and Financial Capital) SC = VA HC (an appropriate proxy for Structural Capital), a result of Human Capital s past performance = VA HC (indicator of Human Capital Efficiency) = VA CA (indicator of Capital Employed Efficiency) = SC VA (indicator of Structural Capital Efficiency) = + + (Value Added Intellectual Coefficient) This analysis is based on the assumptions that both physical and intellectual capitals are used in production. They are both investment items and are treated as functions of value added creation. However, in this study, total assets of the banks are considered as capital employed, since no contributory intangible resources are traced in the financial statements of the banks. It may be noted that structural capital used to calculate Structural Capital Efficiency, may not be a complete measure of structural capital, because it neglects firms innovative capital (Research & Development Expense) and relational capital (Advertising Expenditure). To calculate the total operating income, the researcher has taken the sum total of net interest income, investment income, commission exchange and brokerage income, and other operating income. The operating expense is directly extracted from the income statements of the sample banks. To calculate the personnel cost, the researcher has taken the sum total of salaries &

5 Intellectual Capital and Its influence on the Financial Performance 165 allowances of all employees, salaries & allowances of managing director, and the expense for the directors. On the other hand, the researcher used the following formulas to derive the different financial performance indicators: Return on Equity (ROE) = Profit after Tax / Total Equity Return on Assets (ROA) = Profit after Tax / Total Assets Earnings per Share (EPS) = Profit after Tax / Number of Common Shares Cost Income Ratio (C/I) = Operating Expense / Operating Income Credit Deposit Ratio (C/D) = Total Loans & Advances / Total Deposits Financial Leverage (FL) = Total Assets / Total Equities Tested Hypotheses The basic hypothesis tested in this study is the intellectual capital and also its components of a bank have influence on its financial performance. The details of the tested hypotheses are shown in the following table: Hypothesis Ref Table 1: Hypothesis Tested in the Study Null Hypothesis (H 0 ) Alternative Hypothesis (H 1 ) Intellectual Capital has no influence to Return on Equity (ROE) of the bank. Intellectual Capital has influence to Return on Equity (ROE) of the bank. Intellectual Capital has no influence to Return Intellectual Capital has influence to Return on Assets (ROA) of the bank. on Assets (ROA) of the bank. Intellectual Capital has no influence to Intellectual Capital has influence to Earnings Earnings per Share (EPS) of the bank. per Share (EPS) of the bank. Intellectual Capital has no influence to Cost Intellectual Capital has influence to Cost Income Ratio (C/I) of the bank. Income Ratio (C/I) of the bank. Intellectual Capital has no influence to Credit Intellectual Capital has influence to Credit Deposit Ratio (C/D) of the bank. Deposit Ratio (C/D)of the bank. Intellectual Capital has no influence to Intellectual Capital has influence to Financial Leverage (FL) of the bank. Financial Leverage (FL) of the bank. Findings and Interpretation of Research Findings Intellectual Capital Efficiency Score The average score of the sample banks for is 4.14 (ranges between to -7.37, σ = 2.08, median = 3.89), for is 3.41 (ranges between 9.57 to -8.43, σ = 2.04, median = 3.16), for is 0.04 (ranges between 0.09 to -0.05, σ = 0.02, median = 0.04), and for is 0.70 (ranges between 3.85 to -0.32, σ = 0.33, median = 0.69).

6 166 ASA University Review, Vol. 5 No. 1, January June, 2011 Southeast Bank has the highest average score of 7.63 and highest average score of 6.75 amongst the sample, Prime Bank highest average score of 0.05 and ICB Islamic Bank highest average score of 1.03 (while Southeast Bank has the second highest average score of 0.84). This research finding is consistent with the findings of Mohiuddin, Najibullah and Shahid (2006), who also found similar result in their empirical study. Indicators for Financial Performance The average result of the sample banks for Return on Equity (ROE) is 18.57% (ranges between 53.46% to %, σ = 0.11, median = 17.38%), Return on Assets (ROA) is 0.75% (ranges between 3.15% to %, σ = 0.02, median = 1.01%), Earnings per Share (EPS) is (ranges between to -8,230.00, σ = , median = 59.12), Cost Income Ratio (C/I) is 0.45 (ranges between 4.64 to -3.69, σ = 0.60, median = 0.44 ), Credit Deposit Ratio (C/D) is 0.78 (ranges between 1.15 to 0.12, σ = 0.16, median = 0.79), and Financial Leverage (F/L) is (ranges between to , σ = 11.91, median = 16.43). The findings show that Dhaka Bank has the highest average ROE of 26.22%, Eastern Bank has the highest average ROA of 1.68%, Islami Bank Bangladesh has the highest average EPS of , AB Bank has the highest average Cost Income Ratio (C/I) of 0.60, Islami Bank Bangladesh has the highest average Credit Deposit Ratio (C/D) of 0.88, and IFIC Bank has the highest average Financial Leverage (F/L) of Correlation Analysis There exists strong correlation amongst the and its components except weak but significant correlation between vs (0.181*). However, the researcher failed to find any relationship in case of vs and vs. The researcher found strong correlation between vs ROA, moderate relationship between vs EPS, and weak but significant correlation between vs Credit Deposit Ratio (0.212**). However, the researcher failed to find any relationship in case of vs ROE, vs Cost Income Ratio, and vs Financial Leverage. Similar findings are also found in case for s components and. On the contrary, the researcher found weak but significant correlation between vs ROE (0.197*), vs EPS (-0.233**), and vs Financial Leverage (-0.379**), whereas failed to find any relationship in case of vs ROA, vs Cost Income Ratio and vs Credit Deposit Ratio. The following correlation matrix shows the relationship amongst the variables.

7 Intellectual Capital and Its influence on the Financial Performance 167 Table 2: Correlation Matrix of the Variables ROE ROA EPS C/I C/D FL ROE ROA EPS C/I C/D FL Pearson Correlation **.487** **.011 Sig. (2-tailed) Pearson Correlation.987** **.531** **.072 Sig. (2-tailed) Pearson Correlation.603** **.519** *.065 Sig. (2-tailed) Pearson Correlation.181*.197* ** ** Sig. (2-tailed) Pearson Correlation * -.289** -.189* Sig. (2-tailed) Pearson Correlation.631** -.161* 1.851** * Sig. (2-tailed) Pearson Correlation.487** -.289**.851** 1.230** ** Sig. (2-tailed) Pearson Correlation * ** ** Sig. (2-tailed) Pearson Correlation.212** * Sig. (2-tailed) Pearson Correlation *.237**.216** -.198* 1 Sig. (2-tailed) Note: **. Correlation is significant at the 0.01 level (2-tailed), *. Correlation is significant at the 0.05 level (2-tailed)

8 168 ASA University Review, Vol. 5 No. 1, January June, 2011 Hypothesis Test and Results The test result shows that all alternative hypotheses (H1) are accepted, except for Hypothesis-3 & 6 where null hypothesis (H0) is accepted. Therefore, it can be inferred that Intellectual Capital (measured by ) and its components (,, and ) has influence on the Return on Equity (ROE), Return on Assets (ROA), Cost Income Ratio (C/I), and Credit Deposit Ratio (C/D) of the banks. However, the researcher failed to identify the influence of Intellectual Capital (measured by ) and its components (,, and ) over the Earnings per Share (EPS) and Financial Leverage (F/L) of the banks. The test results have been shown in the following table: Variable Tested ROE ROA Mean Std. Deviation Table 3: t-test Results Paired Differences Std. Error Mean 95% Confidence Interval of the Difference Lower Upper t df Sig. (2- tailed) EPS (29.57) (142.08) (0.52) C/I C/D FL (13.38) (15.29) (11.47) (13.85) Note: t Critical one-tail = ±1.65, t Critical two-tail = ±1.98 The influence of Intellectual Capital (measured by ) and its components (,, and ) over all the 6 financial performance indicators was also found in general for all individual banks except for ICB Islamic Bank. The bank wise influence summaries have been shown in the following table:

9 Intellectual Capital and Its influence on the Financial Performance 169 Bank ICB Islamic Bank IFIC Bank Prime Bank Islami Bank Bangladesh Uttara Bank Pubali Bank IC Quotient Table 4: Influence on the Financial Indicators Influence on the Financial Indicators ROE ROA EPS C/I C/D FL No No No No No No t= 0.82 t= 1.18 t= 1.34 t= 1.04 t= 0.25 t= (0.02) No No No No No No t= (0.28) t= 0.01 t= 1.34 t= (0.16) t= (0.87) t= (0.21) Yes Yes No No Yes No t= (4.13) t= 2.43 t= 1.34 t= (0.20) t=(15.76) t= (0.19) Yes Yes No No No No t= 2.52 t= 3.50 t= 1.34 t= 1.43 t= 0.77 t= (0.02) t= t= t= (4.25) t= 8.82 t= t= (3.71) t= t= t= (4.31) t= 7.49 t= 8.98 t= (3.81) t= (3.39) t= 7.01 t= (4.54) t= (7.61) t=(13.68) t= (4.25) Yes Yes Yes No Yes Yes t= 8.85 t= t= (4.49) t= 0.25 t= (4.55) t= (4.16) t= t= t= (6.87) t= t= t= (7.17) t= t= t= (6.98) t= t= t= (7.97) t= (4.77) t= t= (7.47) t= (8.80) t=(29.53) t=(13.10) Yes Yes Yes Yes No Yes t= t= t= (7.37) t= 8.83 t= 0.81 t=(12.35) t= t= t= (5.56) t= t= t=(20.54) t= t= t= (5.57) t= t= t=(22.15) t= (8.05) t= t= (5.61) t= (9.41) t=(116.83) t=(30.26) t= t= t= (5.61) t= 3.07 t= (7.78) t=(28.89) t= t= 9.71 t= (4.87) t= 6.86 t= 7.45 t= (9.05) t= t= 9.83 t= (4.88) t= 6.42 t= 7.08 t= (9.18) t= (3.43) t= t= (4.93) t= (7.41) t= (18.41) t= (9.63) Yes Yes Yes No No Yes t= 8.22 t= 8.40 t= (4.92) t= 0.10 t= (2.02) t= (9.57) t= t= t= (6.17) t= t= t= (5.89)

10 170 ASA University Review, Vol. 5 No. 1, January June, 2011 Bank National Bank The City Bank AB Bank Eastern Bank Dhaka Bank IC Influence on the Financial Indicators Quotient ROE ROA EPS C/I C/D FL t= t= t= (6.21) t= t= t= (6.12) t= (6.26) t= t= (6.34) t=(12.54) t= (7.15) t= (7.04) Yes Yes Yes No No Yes t= t= t= (6.31) t= 0.47 t= (0.51) t= (6.85) t= t= t= (6.62) t= t= t=(10.47) t= t= t= (6.71) t= t= t=(11.10) t= (4.50) t= t= (7.05) t=(12.40) t= (51.38) t=(13.79) Yes Yes Yes No Yes Yes t= t= t= (6.97) t= 1.82 t= (7.61) t=(13.26) t= 6.13 t= 6.43 t= (4.64) t= 5.36 t= 5.17 t= (7.56) t= 5.44 t= 5.77 t= (4.72) t= 4.67 t= 4.41 t= (7.85) t= (3.30) t= 8.90 t= (5.09) t= (9.86) t= (66.86) t= (8.84) Yes Yes Yes No Yes Yes t= 6.13 t= 9.58 t= (5.02) t= 0.38 t= (2.30) t= (8.61) t= 7.47 t= 7.30 t= (2.92) t= 5.47 t= 5.92 t= (6.22) t= 6.91 t= 6.77 t= (2.95) t= 4.81 t= 5.21 t= (6.59) t= (4.00) t= 9.04 t= (3.04) t= (8.21) t= (41.64) t= (9.01) Yes Yes Yes No Yes Yes t= t= t= (3.02) t= 0.01 t= (3.32) t= (8.61) t= t= t=(13.56) t= t= t= (6.63) t= t= t=(13.85) t= t= t= (8.22) t=(15.31) t= t=(15.80) t= (9.65) t= (19.76) t=(19.40) Yes Yes Yes Yes No Yes t= t= t=(15.53) t= t= (0.86) t=(17.91) t= t= t= (8.50) t= t= t= (6.82) t= t= t= (8.63) t= t= t= (7.16)

11 Intellectual Capital and Its influence on the Financial Performance 171 Bank Southeast Bank Al Arafa Islami Bank IC Quotient Influence on the Financial Indicators ROE ROA EPS C/I C/D FL t= (11.24) t= t= (9.29) t= (10.73) t= (16.19) t= (9.11) Yes Yes Yes Yes No Yes t= t= t= (9.17) t= 7.34 t= 1.65 t= (8.79) t= t= t= (10.98) t= t= t= (4.24) t= t= t= (11.20) t= t= t= (4.61) t= (8.30) t= t= (12.90) t= (8.10) t= (20.23) t= (8.68) Yes Yes Yes Yes No Yes t= t= t= (12.71) t= t= 0.28 t= (8.27) t= t= t= (4.65) t= t= t= (5.66) t= t= t= (4.66) t= t= t= (6.02) t= (7.21) t= t= (4.73) t= (9.97) t= (14.47) t= (7.98) Yes Yes Yes Yes No Yes t= t= t= (4.72) t= 4.84 t= (2.01) t= (7.64) Note: t Critical one-tail = ±1.80, t Critical two-tail = ±2.20 This overall findings support the research of Reed (2000) who showed intellectual capital is a strong predictor of a bank s performance, Riahi-Belkaoui (2003) who proved intellectual capital is positively associated with financial performance of multi-national companies in the United States of America, Mind Shu and Yuhchang (2005) who found that intellectual capital have a positive impact on financial performance of listed companies in Taiwan, and Iswatia & Anshoria (2007) who showed intellectual capital s influence on financial performance of insurance companies listed in Jakarta Stock Exchange. Besides, it also supports the findings of Youndt (1998), Bontis (1998), Bontis et.al (2000), Walker (2001) and Shook (2002) who empirically shows that a positive relationship exists between intellectual capital and company performance. Similarly, the hypotheses has been proved in general also for the components (e.g.,,, and ), except in the case of Credit Deposit Ratio and Earnings per Share. Thus, it can be concluded that this research has the consistency with the previous findings of different researchers and the overall findings also prove that the components of the intellectual capital of a bank have influence on its financial performance. Conclusion The findings of this study support the assumptions that intellectual capital plays a positive role on the financial performance of a bank. Therefore, the management and the shareholders of the banks may think how they can best capitalize the intellectual capital to increase the business performance and competitive edge of the banks. The researcher strongly believes that this study

12 172 ASA University Review, Vol. 5 No. 1, January June, 2011 would assist the management of a bank to evaluate its developing tendency periodically and also to recognize the status quo of their IC by offering periodic evaluation of their IC as to discover their distance from their competitors, the demands of customers, and the firms with the best IC management. Besides, a bank can apply the knowledge in the management to each department for assessing their employees achievements by setting the aims in enhancing the IC for each department. The researcher also hopes that future researchers can conduct study in an extended manner in order to better explain the overall condition of intellectual capital in the business sector of Bangladesh. Reference Bollen, L., P. Vergauwen, and S. Schnieders (2005), Linking intellectual capital and intellectual property to company performance, Management Decision, Vol. 43 No. 9, pp Bontis, N., K. Dragonetti, and G. Roos (1999), The Knowledge Toolbox: A Review of the Tools Available to Measure and Manage Intangible Resources, European Management Journal, Vol. 17(4). Chen, J., Z. Zhu and H.Y. Xie (2004), Measuring Intellectual Capital: A New Model and Empirical Study, Vol. 5(1), pp Edvinsson L. and S. Malone (1997), Intellectual Capital: Realizing Your Company s True Value by Finding Its Hidden Brainpower, HarperCollins Publisher, New York. Firer S. and L. Stainbank (2003), Testing the Relationship between Intellectual Capital and a Company s Performance: Evidence from South Africa, Meditari Accountancy Research, Vol. 11, pp Firer S. and M. Williams (2003), Intellectual Capital and Traditional Measures of Corporate Performance, Journal of Intellectual Capital, Vol. 4, No. 3, pp Goh, P. C. (2005), Intellectual Capital Performance of Commercial Banks in Malaysia, Journal of Intellectual Capital, Vol. 6(3), pp Huang C. and S. Hsueh (2007), A Study on the Relationship between Intellectual Capital and Business Performance in the Engineering Consulting Industry: A Path Analysis, Journal of Civil Engineering and Management, Vol. XIII, No 4, pp Hussain T., L. Chakraborty and S. Rahman (2010), Testing the Relationship between Intellectual Capital and Firms' Market Value and Financial Performance: Evidence from Bangladeshi Industries, Knowledge Globalization Conference 2010, May 8-10, 2010, Dhaka, Bangladesh. Ismail, M. and A. R. Songip (2008), The Influence of Knowledge Management and Leveraging of Intellectual Capital on the Organization Performance: A Case Study of Telekom Malaysia, Available from: Iswatia S. and M. Anshoria (2007), The Influence of Intellectual Capital to Financial Performance at Insurance Companies in Jakarta Stock Exchange (JSE), Proceedings of the 13th Asia Pacific Management Conference, Melbourne, Australia, 2007, pp Ji-jian Z., Z. Nai-ping, and K. Yu-sheng (2006), Study on Intellectual Capital and Enterprise s Performance Empirical Evidence from the Chinese Securities Market, Journal of Modern Accounting and Auditing, Vol.2, No.10. Makki, M.A.M., S.A. Lodhi, and R. Rahman, (2008), Intellectual Capital Performance of Pakistani Listed Corporate Sector, International Journal of Business and Management, Vol. 3 No. 10, pp Marr, B., G. Schiuma, and A. Neely, (2004), The Dynamics of Value Creation: Mapping Your Intellectual Performance Drivers, Journal of Intellectual Capital, Vol. 5, No. 2, pp

13 Intellectual Capital and Its influence on the Financial Performance 173 Mavridis, D. G. (2004), The Intellectual Capital Performance of the Japanese Banking Sector, Journal of Intellectual Capital, Vol. 5(1), pp Mohiuddin, M., S. Najibullah, and A. I. Shahid, (2006), An Exploratory Study on Intellectual Capital Performance of the Commercial Banks in Bangladesh, The Journal of Cost and Management, Vol. 34, No. 6, pp Muhammad M., F. Isa and N. Ismail (2008), Intellectual Capital Efficiency Level of Malaysian Financial Sector: Panel Data Analysis ( ), Available from: Najibullah S. (2005), An Empirical Investigation of the Relationship between Intellectual Capital and Firms Market Value and Financial Performance in context of Commercial Banks of Bangladesh, Internship Report Presented in Partial Fulfillment of the Requirements for the Degree Bachelor of Business Administration, Independent University, Bangladesh. Pulic, A. (1998), Measuring the performance of intellectual potential in knowledge economy. Available from: Pulic, A. (2000), - An Accounting Tool for IC Management, International Journal of Technology Management, Vol. 20(5). Riahi-Belkaoui, A. (2003), Intellectual Capital and Firm Performance of US Multinational Firms: A Study of the Resource-Based and Stakeholder Views, Journal of Intellectual Capital, Vol. 4. No. 2, pp Sample Banks ( ), Annual Reports of 13 Sample Banks used in the Study. Stewart, K. E. (1997), The New Wealth of Organizations, Doubleday/Currency, New York. Williams, M. (2001), Is intellectual capital performance and disclosure practices related?, Journal of Intellectual Capital, Vol. 2(3), pp