Intellectual Capital and Bank Performance in Europe

Gimede Gigante


This paper:

  • Obtains measures of intellectual capital performance for quoted banks in selected European countries (Czech Republic, Denmark, Finland, Germany, Italy, Norway, Poland, Spain, Sweden) during the 2004-2007 period;
  • Investigates empirically the relationship between (i) the efficiency of value creation and (ii) bank market valuation and financial performance;
  • Tests the effects of intellectual capital performance on profitability and evaluates whether or not intellectual capital can be considered a decision-making factor for investors.

Using data drawn from public annual reports and Ante Pulic’s Value Added Intellectual Coefficient (VAIC) as a measure of the efficiency of capital employed and intellectual capital, the study uses regression models to examine the relationship between corporate value-creation efficiency and a firms’ market-to-book value ratios and corporate value-creation efficiency.

Some important findings include:

  • The determination of correlation, if any, between the financial performance of the banks and their VAIC.
  • The determination of the Italian bank efficiency in the use of intellectual capital in relation to some other European competitors.
  • The validation of the assumption as to whether or not investors place higher value on firms with greater intellectual capital.

The research limitations/implications include:

  • The failure of the study to consider all banks operating in the countries analyzed (due to insufficient data, mainly for unlisted banks) and the limited time period of three years.

Practical implications of the analysis include:

  • The results can assist the managers of the respective banks in benchmarking their positions regarding intellectual capital. The study might also assist policymakers in formulating and implementing policy regarding intellectual capital development, while it may also aid investors in modifying investment strategies.

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Accounting and Finance Research
ISSN 1927-5986 (Print)   ISSN 1927-5994 (Online) Email:

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