Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 289 Download : 334

Downloads

Download data is not yet available.

Main Article Content

Abstract

Purpose – This study examines the contribution of intellectual capital (IC) to Islamic banks’ cost efficiency.
Methodology – The data envelopment analysis (DEA) method uses an intermediation approach to measure the cost efficiency of Islamic banks and modified value-added intellectual capital (MVAIC) as a measurement of IC. The sample of this research comprises 11 Islamic commercial banks registered with the financial services authority (Otoritas Jasa Keuangan, OJK) and operating from to 2014-2023. This research method uses the system generalized method of moments (SGMM) regression to analyze the impact of IC on the cost efficiency of Islamic banks.
Findings – The results showed that IC positively affects the cost efficiency of Islamic banks in Indonesia. Another finding is that human capital (HC) contributes significantly to improving the cost efficiency of Islamic banks. structural capital (SC), capital employed (CE), and relational capital (RC) do not affect the cost efficiency of Islamic banks.
Implications – This research implies that Islamic banks can determine which IC components require additional investment to improve efficiency and provide future Islamic banking performance-oriented towards new technology.
Originality – This study seeks to fill the gap in previous research by analyzing the impact of IC and its components on the cost efficiency of Islamic banks.

Keywords

Intellectual capital cost efficiency Islamic Banks

Article Details

License

Copyright (c) 2024 T. Saipul Hadi, Nisful Laila, Nissar Ahmad Yatoo

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
How to Cite
Hadi, T. S., Laila, N., & Yatoo, N. A. . (2024). Unlocking the synergy between intellectual capital and cost efficiency in Islamic bank. Jurnal Ekonomi & Keuangan Islam, 10(2), 149–163. https://doi.org/10.20885/JEKI.vol10.iss2.art1
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX
Crossref
Scopus
Google Scholar
Europe PMC

References

  1. Adesina, K. S. (2019). Bank technical, allocative and cost efficiencies in Africa: The influence of intellectual capital. The North American Journal of Economics and Finance, 48, 419-433. https://doi.org/10.1016/j.najef.2019.03.009
  2. Ahmad, K. (2007). Management from Islamic perspective: Principles & practices. Research Centre, IIUM.
  3. Akkas, E., & Asutay, M. (2023). The impact of intellectual capital formation and knowledge economy on banking performance: a case study of GCC’s conventional and Islamic banks. Journal of Financial Reporting and Accounting, 21(5), 1149-1170. https://doi.org/10.1108/JFRA-08-2021-0251
  4. Archer, T. S. (2010). The efficiency theory: Improving society by eliminating wasteful programs, restructuring the economy, and fixing education. CreateSpace Independent Publishing Platform.
  5. Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277-297. https://doi.org/10.2307/2297968
  6. Ascarya, A., & Yumanita, D. (2008). Comparing the efficiency of Islamic banks in Malaysia and Indonesia. Bulletin of Monetary Economics and Banking, 11(2), 95-119. https://doi.org/10.21098/bemp.v11i2.237
  7. Aslam, E., Rehman, A. U., & Iqbal, A. (2024). The mediating role of intellectual capital in corporate governance and financial efficiency of Islamic banks. Corporate Governance: The International Journal of Business in Society, 24(1), 19-40. https://doi.org/10.1108/CG-06-2022-0276
  8. Asutay, M., & Ubaidillah. (2023). Examining the impact of intellectual capital performance on financial performance in Islamic banks. Journal of the Knowledge Economy, 1-33. https://doi.org/10.1007/s13132-023-01114-1
  9. Barney, J. B. (2001). Is the resource-based “view” a useful perspective for strategic management research? Yes. Academy of Management Review, 26(1), 41-56. https://doi.org/10.5465/AMR.2001.4011938
  10. Bontis, N. (1998). Intellectual capital: An exploratory study that develops measures and models. Management decision, 36(2), 63-76. https://doi.org/10.1108/00251749810204142
  11. Bontis, N., Chua Chong Keow, W., & Richardson, S. (2000). Intellectual capital and business performance in Malaysian industries. Journal of Intellectual Capital, 1(1), 85–100. https://doi.org/10.1108/14691930010324188
  12. Buallay, A., Hamdan, A. M., Reyad, S., Badawi, S., & Madbouly, A. (2020). The efficiency of GCC banks: The role of intellectual capital. European Business Review, 32(3), 383–404. https://doi.org/10.1108/EBR-04-2019-0053
  13. Campanella, F., Serino, L., Battisti, E., Giakoumelou, A., & Karasamani, I. (2023). FinTech in the financial system: Towards a capital-intensive and high competence human capital reality? Journal of Business Research, 155, 113376. https://doi.org/10.1016/j.jbusres.2022.113376
  14. Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2(6), 429–444. https://doi.org/10.1016/0377-2217(78)90138-8
  15. Farooque, O. Al, Al Obaid, R. O. H., & Khan, A. A. (2023). Does intellectual capital in Islamic banks outperform conventional banks? Evidence from GCC countries. Asian Review of Accounting, 31(5), 805–831. https://doi.org/10.1108/ARA-12-2022-0298
  16. Farrell, M. J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society: Series A (General), 120(3), 253-281. https://doi.org/10.2307/2343100
  17. Gupta, K., & Raman, T. V. (2021). Intellectual capital: a determinant of firms’ operational efficiency. South Asian Journal of Business Studies, 10(1), 49–69. https://doi.org/10.1108/SAJBS-11-2019-0207
  18. Klimontowicz, M., & Majewska, J. (2022). The contribution of intellectual capital to banks’ competitive and financial performance: The evidence from Poland. Journal of Entrepreneurship, Management and Innovation, 18(2), 105–136. https://doi.org/10.7341/20221824
  19. Kozlenkova, I. V, Samaha, S. A., & Palmatier, R. W. (2013). Resource-based theory in marketing. Journal of the Academy of Marketing Science, 42(1), 1–21. https://doi.org/10.1007/s11747-013-0336-7
  20. Kweh, Q. L., Lu, W. M., Tone, K., & Nourani, M. (2022). Risk-adjusted banks' resource-utilization and investment efficiencies: Does intellectual capital matter? Journal of Intellectual Capital, 23(3), 687-712. https://doi.org/10.1108/JIC-03-2020-0106
  21. Le, T. D., Ho, T. N., Nguyen, D. T., & Ngo, T. (2022). Intellectual capital–bank efficiency nexus: Evidence from an emerging market. Cogent Economics & Finance, 10(1), 2127485. https://doi.org/10.1080/23322039.2022.2127485
  22. Lotto, J. (2019). Evaluation of factors influencing bank operating efficiency in Tanzanian banking sector. Cogent Economics & Finance, 7(1), 1664192. https://doi.org/10.1080/23322039.2019.1664192
  23. Maji, S. G., & Hussain, F. (2021). Technical efficiency, intellectual capital efficiency and bank performance in emerging markets: The case of India. Journal of Advances in Management Research, 18(5), 708–737. https://doi.org/10.1108/JAMR-09-2020-0218
  24. Masrizal, Sukmana, R., Fianto, B. A., & Gultom, R. Z. (2023). Does economic freedom fosters Islamic rural banks efficiency? Evidence from Indonesia. International Journal of Productivity and Performance Management, 72(9), 2538-2558. https://doi.org/10.1108/IJPPM-11-2021-0660
  25. Mention, A. L., & Bontis, N. (2013). Intellectual capital and performance within the banking sector of Luxembourg and Belgium. Journal of Intellectual Capital, 14(2), 286–309. https://doi.org/10.1108/14691931311323896/FULL/PDF
  26. Mohapatra, S., Jena, S. K., Mitra, A., & Tiwari, A. K. (2019). Intellectual capital and firm performance: Evidence from Indian banking sector. Applied Economics, 51(57), 6054–6067. https://doi.org/10.1080/00036846.2019.1645283
  27. Nadeem, M., Gan, C., & Nguyen, C. (2017). Does intellectual capital efficiency improve firm performance in BRICS economies? A dynamic panel estimation. Measuring Business Excellence, 21(1), 65–85. https://doi.org/10.1108/MBE-12-2015-0055
  28. Onumah, J. M., & Duho, K. C. T. (2020). Impact of intellectual capital on bank efficiency in emerging markets: Evidence from Ghana. International Journal of Banking, Accounting and Finance, 11(4), 435–460. https://doi.org/10.1504/IJBAAF.2020.110303
  29. Paradi, J., C., S. R., & . H. Z. (2011). Two-stage evaluation of bank branch efficiency using data envelopment analysis. Omega, 39(1), 99–109. https://doi.org/10.1016/j.omega.2010.04.002
  30. Poh, L. T., Kilicman, A., & Ibrahim, S. N. I. (2018). On intellectual capital and financial performances of banks in Malaysia. Cogent Economics & Finance, 6(1), 1453574. https://doi.org/10.1080/23322039.2018.1453574
  31. Prasojo, P., Yadiati, W., Fitrijanti, T., & Sueb, M. (2023). Exploring the relationship between intellectual capital and maqasid sharia-based performance: The moderating role of sharia governance. Journal of Islamic Marketing, 14(8), 2130-2146. https://doi.org/10.1108/JIMA-07-2021-0226
  32. Pratama, B. C., & Innayah, M. N. (2021). Can family ownership strengthen the relationship between intellectual capital and performance in ASEAN high-tech firms? International Journal of Business and Society, 22(3), 1102–1122. https://doi.org/10.33736/ijbs.4286.2021
  33. Pulic, A. (2000). VAIC™–an accounting tool for IC management. International Journal of Technology Management, 20(5-8), 702-714. https://doi.org/10.1504/ijtm.2000.002891
  34. Rani, L. N., Laila, N., Rahman, A. A., Bayuny, A. F. R., Filianti, D., & Purbasari, L. T. (2024). The effects macroeconomic on corporate sukuk Ijarah returns: Evidence from Indonesia. Migration Letters, 21(3), 632–652. https://migrationletters.com/index.php/ml/article/view/6760
  35. Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9(1), 86-136. https://doi.org/10.1177/1536867x0900900106
  36. Shah, S. A. A., Sukmana, R., & Fianto, B. A. (2021). Efficiencies in Islamic banking: A bibliometric and theoretical review. International Journal of Productivity and Quality Management, 32(4), 458–501. https://doi.org/10.1504/IJPQM.2021.114268
  37. Sufian, F. (2013). Economic freedom and bank efficiency nexus. International Journal of Monetary Economics and Finance, 6(2-3), 150-185. https://doi.org/10.1504/ijmef.2013.056395
  38. Sufian, F., & Shah Habibullah, M. (2014). Economic freedom and bank efficiency: Does ownership and origins matter? Journal of Financial Regulation and Compliance, 22(3), 174–207. https://doi.org/10.1108/jfrc-01-2013-0001
  39. Sufian, F., & Zulkhibri, M. (2015). The nexus between economic freedom and Islamic bank profitability in the MENA banking sectors. Global Business Review, 16(5_suppl), 58S-81S. https://doi.org/10.1177/0972150915601256
  40. Sutrisno, & Widarjono, A. (2018). Maqasid sharia index, banking risk and performance cases in Indonesian Islamic banks. Asian Economic and Financial Review, 8(9), 1175–1184. https://doi.org/10.18488/journal.aefr.2018.89.1175.1184
  41. Taylor, D., Sarpong, B., & Cudjoe, E. Y. (2022). Cost-efficiency and bank profitability during health crisis. Applied Economics Letters, 31(8), 732–737. https://doi.org/10.1080/13504851.2022.2146644
  42. Ting, I. W. K., Chen, F. C., Kweh, Q. L., Sui, H. J., & Le, H. T. M. (2022). Intellectual capital and bank branches’ efficiency: An integrated study. Journal of Intellectual Capital, 23(4), 840–863. https://doi.org/10.1108/JIC-07-2020-0245
  43. Tran, S., Nguyen, D., & Nguyen, L. (2022). Concentration, capital, and bank stability in emerging and developing countries. Borsa Istanbul Review, 22(6), 1251-1259. https://doi.org/10.1016/j.bir.2022.08.012
  44. Ulum, I. (2013). Model pengukuran kinerja intellectual capital dengan iB-VAIC di perbankan syariah. INFERENSI: Jurnal Penelitian Sosial Keagamaan, 7(1), 185-206. https://doi.org/10.18326/infsl3.v7i1.185-206
  45. Ulum, I., Kharismawati, N., & Syam, D. (2017). Modified value-added intellectual coefficient (MVAIC) and traditional financial performance of Indonesian biggest companies. International Journal of Learning and Intellectual Capital, 14(3), 207–219. https://doi.org/10.1504/IJLIC.2017.086390
  46. Ur Rehman, A., Aslam, E., & Iqbal, A. (2022). Intellectual capital efficiency and bank performance: Evidence from Islamic banks. Borsa Istanbul Review, 22(1), 113–121. https://doi.org/10.1016/j.bir.2021.02.004
  47. Vidyarthi, H. (2019). Dynamics of intellectual capitals and bank efficiency in India. Service Industries Journal, 39(1), 1–24. https://doi.org/10.1080/02642069.2018.1435641
  48. Vidyarthi, H., & Tiwari, R. (2020). Cost, revenue, and profit efficiency characteristics, and intellectual capital in Indian banks. Journal of Intellectual Capital, 21(1), 1–22. https://doi.org/10.1108/JIC-05-2019-0107
  49. Vishnu, S., & Gupta, V. K. (2014). Intellectual capital and performance of pharmaceutical firms in India. Journal of Intellectual Capital, 15(1), 83–99. https://doi.org/10.1108/JIC-04-2013-0049
  50. Wang, X., Sadiq, R., Khan, T. M., & Wang, R. (2021). Industry 4.0 and intellectual capital in the age of FinTech. Technological Forecasting and Social Change, 166, 120598. https://doi.org/10.1016/j.techfore.2021.120598
  51. Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51. https://doi.org/https://doi.org/10.1016/j.jeconom.2004.02.005
  52. Wintoki, M. B., Linck, J. S., & Netter, J. M. (2012). Endogeneity and the dynamics of internal corporate governance. Journal of Financial Economics, 105(3), 581–606. https://doi.org/https://doi.org/10.1016/j.jfineco.2012.03.005