NEXUS BETWEEN INTELLECTUAL CAPITAL AND PERFORMANCE OF COMMERCIAL BANKS

The significance of Intellectual Capital (IC) is paramount, as it is seen as a necessary asset for the success of high-tech organizations such as banks. Therefore, it is essential to focus on the understanding and implementation of IC in the context of commercial banks. The primary objective of this study is to investigate the influence of intellectual capital (IC) on the financial and nonfinancial performance of commercial banks that are listed on the Karachi Stock Exchange (KSE) within the time frame spanning from 2010 to 2020. The intellectual capital of a corporation was determined using the Value- Added Intellectual Coefficient (VAICTM) approach. The study of panel data included the use of fixed effect and random effect regression models to investigate the relationship between components of intellectual capital (IC) and company performance. The empirical study's results suggest that there is a stronger correlation between structural capital efficiency and company success compared to capital employed efficiency and human capital efficiency. There exists a positive correlation between the Value-Added Intellectual Coefficient (VAIC) and both financial success and market performance. However, a negative correlation is shown between VAIC and customer satisfaction. Based on the results of recent research, commercial banks in Pakistan should prioritize the development of their intellectual capital in order to reap advantages and establish themselves as a benchmark for other industries.