Navigating Complexity: Uncovering the Intricate Dynamics Between Intellectual Capital, Efficiency, and Performance in Taiwan’s Banking Sector

As the global landscape places greater emphasis on intangible assets, the role of intellectual capital (IC) in adding value has gained heightened importance. This study examines the role of IC, technical efficiency, and income diversity in shaping the performance of Taiwan’s banks. Using the resource-based view of the firm, it investigates the relationship between IC and firm performance, the impact of well-organized technical efficiency on bank performance, and the influence of income diversity on bank performance. This paper employs Fixed Effects regression and Generalized Method of Moments models to analyze the research questions. The findings reveal a complex landscape wherein it is shown that IC has a limited impact on profitability, but technical and intellectual capital efficiency can positively influence bank performance. Implications for both theory and practice are discussed.