Title: The effects of intellectual capital on risk and return of banks: nonlinear modelling approach

Authors: Nicholas Asare; Joseph Mensah Onumah; Alex Dontoh

Addresses: Department of Accounting, University of Ghana Business School, University of Ghana, Accra, Ghana ' Department of Accounting, University of Ghana Business School, University of Ghana, Accra, Ghana ' Stern School of Business, New York University, New York, USA

Abstract: This study examines the nonlinear effects of intellectual capital (IC) on the risks and returns of banks. Using the annual data of 366 banks from 26 African countries during 2007 to 2015, the study estimates the following: IC using the value-added intellectual coefficient (VAIC); risks and returns of banks using net interest margin; risk-adjusted return on assets; and insolvency risk. The results indicate that the relationship between net interest margin/insolvency risk and IC is nonlinear, U-shaped/ inverted U-shaped. The study's findings provide evidence for the extent of IC's contribution to the performance and stability of banks in Africa. This study's multidimensional conceptualisation of IC, risks and returns provides a robust systematic approach to a comprehensive understanding of aspects of the banking sector in emerging economies in Africa.

Keywords: intellectual capital; nonlinear; performance; stability; banks; Africa.

DOI: 10.1504/IJLIC.2023.127693

International Journal of Learning and Intellectual Capital, 2023 Vol.20 No.1, pp.6 - 28

Accepted: 16 Jan 2022
Published online: 14 Dec 2022 *