The Relationship Between Intellectual Capital and Performance: A Study on Turkish Banking Sector

In this paper, considering the increasing importance of intellectual capital (IC), we focus on the effects of not only IC but also its three components on Turkish banks’ financial performance by using VAIC (Value Added Intellectual Coefficient) model. We use a sample of 20 banks operating in Turkey over the period 2013/Q4 - 2019/Q3. We measure financial performance by two widely accepted accounting ratios; namely, ROA and ROE. The results show that VAIC, human capital efficiency (HCE) and capital employed efficiency (CEE) are positively correlated with the banks’ financial performance. In particular, the results indicate the significance of overall intellectual capital, human capital, and financial and physical capital to both increase and sustain banks’ profitability.