IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 5 NO. 2 2019

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Effect of Intellectual Capital Costs on Financial Performance of Listed Commercial Banks in Nigeria

Onuche, Sarah Eleojo Victor & Jones, Ebieri Ph.D., FCIB

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Abstract

The study investigated effect of Intellectual Capital Costs on Financial Performance of listed Commercial Banks in Nigeria during the period 2007 to 2016. The choice of the period was predicated on establishing the relationship of the variables during the Sub-Sector’s post consolidation era in Nigeria. It employed ex post facto research design and extracted data from cross section of three banks from ten (10) years annual report. The data were purposively selected based on availability of data. The study adapted the Value Added Intellectual Capital Coefficient Model as proxy for Intellectual Capital Costs while Return on Equity was adopted as proxy for Financial Performance. Engaging the Ordinary Least Squares based balanced Panel data regression technique in a longitudinal data framework of thirty (30) observations, the results established how Intellectual Capital Costs affect Return on Equity of the selected Banks in line with a priori expectation. It provided evidence that 52.8% of the total variation on Return on Equity of listed Banks on Nigeria Stock Exchange is attributable to variations in Intellectual Capital Costs proxies included in the model. The study proved that individually, Human Capital Efficiency has positive significant relationship with Return on Equity while Structural Capital Efficiency and Capital Employed Efficiency individually, has positive but insignificant relationship with Return on Equity. The study therefore substantiated that Intellectual Capital Costs significantly affect Return on Equity and therefore concludes that Intellectual Capital Costs has significant effect on Financial Performance of listed Commercial Banks in Nigeria. It recommends that regulatory authorities should set benchmark of training standards for staff of banks so as to enhance skills not just in banking operations and earnings generation but also in effective and efficient relationship management.

keywords:

Intellectual Capital Costs, Return on Equity, Balanced Panel Data Regression, Listed Commercial Banks, Nigeria.

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