Intellectual capital and corporate performance: a case of Indian banks

Purpose The purpose of this paper is to explore and explain the linkage between intellectual capital (IC) efficiency of banks and their performance. Design/methodology/approach In total, 39 public and private banks listed in Bombay Stock Exchange from 1999 to 2015 were considered for the study. Panel fixed effects technique is used to draw inferences. Findings Results of the study provide evidence of positive association between IC and performance of banks; however, only human capital and structural capital have shown instances of significant positive linkage with banks performance. The results also indicate that the IC efficiency of private sector banks is better than public sector banks in India. Practical implications This study may enable Indian banking firms to measure their IC efficiency and develop policies to promote and improve upon their intellectual potential to enhance banks performance. Originality/value It is a novel study in Indian context that considers interaction variables in extending the prior understanding of the role of IC in enhancing banks performance, which may build sustainable advantage for banks in emerging economies like India.