The Moderating Role of Intellectual Capital between Relationship of Bank Specific Factors and Credit Risk of Islamic Banks Evidence from Pakistan
Authors
Article Sidebar
Main Article Content
Abstract
Purpose-The Objective of this study is to investigate the moderating role of Intellectual Capital between the relationship of Bank internal factor and Credit Risk in Islamic banks of Pakistan.
Design/Methodology-Panel data are obtained from annual reports of 4 Islamic banks of Pakistan from the period 2006 to 2017. These are analyzed using hierarchical regression techniques, via Eviews 9 software.
Findings-The results showed that intellectual capital significantly moderates the relationship of bank internal variable and credit risk in Islamic banks in Pakistan.
Practical Implications-The study found that Intellectual Capital is a very important driver for credit risk. The investment in Intellectual Capital may lower the credit risk which will further help in the growth and sustainability of the bank and hence the growth in the economy. The results of the study will be useful for bank management, policy maker, and regulator and academia for future research.
Article Details
Copyright (c) 2019 Muhammad Nawaz, Dr. Alias Mat Nor, Dr. Habibah Tolos
This work is licensed under a Creative Commons Attribution 4.0 International License.
Ahmed, N., Akhtar, M. F., & Usman, M. (2011). Risk management practices and Islamic banks: An empirical investigation from Pakistan. Interdisciplinary Journal of Research in Business, 1(6), 50-57.
Al-Musali, M. A. K., & Ismail, K. N. I. K. (2014). Intellectual capital and its effect on the financial performance of banks: Evidence from Saudi Arabia. Procedia-Social and Behavioral Sciences, 164, 201-207. DOI: https://doi.org/10.1016/j.sbspro.2014.11.068 CrossrefGoogle Scholar
Ariff, M., & Khalid, A. M. (2000). Liberalization, Growth, and the Asian Financial Crisis: Lessons for Developing and Transitional Economies in Asia: Edward Elgar Publishing. CrossrefGoogle Scholar
Baily, M. N., & Elliott, D. J. (2013). The role of finance in the economy: implications for structural reform of the financial sector. The Brookings Institution, 11.
Barathi Kamath, G. (2007). The intellectual capital performance of the Indian banking sector. Journal of Intellectual Capital, 8(1), 96-123. DOI: https://doi.org/10.1108/14691930710715088 CrossrefGoogle Scholar
Berger, A. N., & DeYoung, R. (1997). Problem loans and cost efficiency in commercial banks. Journal of Banking & Finance, 21(6), 849-870. DOI: https://doi.org/10.1016/S0378-4266(97)00003-4 CrossrefGoogle Scholar
Bontis, N. (1996). There's a price on your head: managing intellectual capital strategically. Business Quarterly, 60, 40-78.
Bourkhis, K., & Nabi, M. S. (2013). Islamic and conventional banks' soundness during the 2007–2008 financial crisis. Review of Financial Economics, 22(2), 68-77. DOI: https://doi.org/10.1016/j.rfe.2013.01.001 CrossrefGoogle Scholar
Chapra, M. U. (2008). Innovation and authenticity in Islamic finance. Paper presented at the Eighth Harvard University Forum on Islamic Finance: Innovation and Authenticity.
Ghosh, S. K., & Maji, S. G. (2014). The impact of intellectual capital on bank risk: Evidence from Indian banking sector. IUP Journal of Financial Risk Management, 11(3), 18.
Gujarati, D. N., & Porter, D. C. (2010). Econometría. 5a. In: McGraw-Hill Interamericana.
Haris, M., Yao, H., Tariq, G., Malik, A., & Javaid, H. M. (2019). Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan. Journal of Risk and Financial Management, 12(2), 56. DOI: https://doi.org/10.3390/jrfm12020056 CrossrefGoogle Scholar
Hassan, M. K., & Kayed, R. N. (2009). The global financial crisis, risk management and social justice in Islamic finance. Risk Management and Social Justice in Islamic Finance. CrossrefGoogle Scholar
Joshi, M., Cahill, D., & Sidhu, J. (2010). Intellectual capital performance in the banking sector: An assessment of Australian owned banks. Journal of Human Resource Costing & Accounting, 14(2), 151-170. DOI: https://doi.org/10.1108/14013381011062649 CrossrefGoogle Scholar
Karim, M. Z. A., Chan, S.-G., & Hassan, S. (2010). Bank efficiency and non-performing loans: Evidence from Malaysia and Singapore. Prague Economic Papers, 2(1), 118-132. DOI: https://doi.org/10.18267/j.pep.367 CrossrefGoogle Scholar
Khan, T., & Ahmed, H. (2001). Risk Management: An Analysis of Issues in Islamic Financial Industry (Occasional Papers). Retrieved from
Meles, A., Porzio, C., Sampagnaro, G., & Verdoliva, V. (2016). The impact of the intellectual capital efficiency on commercial banks performance: Evidence from the US. Journal of Multinational Financial Management, 36, 64-74. DOI: https://doi.org/10.1016/j.mulfin.2016.04.003 CrossrefGoogle Scholar
Mondal, A., & Ghosh, S. K. (2012). Intellectual capital and financial performance of Indian banks. Journal of Intellectual Capital, 13(4), 515-530. DOI: https://doi.org/10.1108/14691931211276115 CrossrefGoogle Scholar
Nawaz, Nor, & Habiba. (2019). Impact of Intellectual Capital on Credit Risk of Conventional Banks in Pakistan. Asian Journal of Multidisciplinary Studies, 7(6), 101. Retrieved from http://www.ajms.co.in/sites/ajms2015/index.php/ajms/issue/view/80.
Nawaz, M., Munir, S., Siddiqui, S. A., Tahseen-ul-Ahad, F., Asif, M., & Ateeq, M. (2012). Credit risk and the performance of Nigerian banks. Interdisciplinary Journal of contemporary research in Business, 4(7), 49-63.
Nawaz, T., & Haniffa, R. (2017). Determinants of financial performance of Islamic banks: an intellectual capital perspective. Journal of Islamic Accounting and Business Research, 8(2), 130-142. DOI: https://doi.org/10.1108/JIABR-06-2016-0071 CrossrefGoogle Scholar
Nor, A. M., & Ahmad, N. H. (2015). Impaired financing determinants of Islamic banks in Malaysia. Information Management and Business Review, 7(3), 17. DOI: https://doi.org/10.22610/imbr.v7i3.1149 CrossrefGoogle Scholar
Ozkan, N., Cakan, S., & Kayacan, M. (2017). Intellectual capital and financial performance: A study of the Turkish Banking Sector. Borsa Istanbul Review, 17(3), 190-198. DOI: https://doi.org/10.1016/j.bir.2016.03.001 CrossrefGoogle Scholar
Pulic, A. (2000). VAIC™–an accounting tool for IC management. International journal of technology management, 20(5-8), 702-714. DOI: https://doi.org/10.1504/IJTM.2000.002891 CrossrefGoogle Scholar
Samuel, O. L. (2015). The effect of credit risk on the performance of commercial banks in Nigeria. African Journal of Accounting, Auditing and Finance, 4(1), 29-52. DOI: https://doi.org/10.1504/AJAAF.2015.071754 CrossrefGoogle Scholar
Stiglitz, J. E., & Stiglitz, J. E. (2003). The roaring nineties: Seeds of destruction: Allen Lane.
Sultan, S. A. M. (2008). Islamic banking: Trend, development and challenges.
Sundararajan, V., & Errico, L. (2002). Islamic financial institutions and products in the global financial system: key issues in risk management and challenges ahead (Vol. 2): International Monetary Fund. CrossrefGoogle Scholar
Sveiby, K. E. (1997). The new organizational wealth: Managing & measuring knowledge-based assets: Berrett-Koehler Publishers. CrossrefGoogle Scholar
Ulrich, D. (1998). A new mandate for human resources. Harvard business review, 76, 124-135.
Wang, W.-Y., & Chang, C. (2005). Intellectual capital and performance in causal models: evidence from the information technology industry in Taiwan. Journal of Intellectual Capital, 6(2), 222-236. DOI: https://doi.org/10.1108/14691930510592816 CrossrefGoogle Scholar
Wei Kiong Ting, I., & Hooi Lean, H. (2009). Intellectual capital performance of financial institutions in Malaysia. Journal of Intellectual Capital, 10(4), 588-599. DOI: https://doi.org/10.1108/14691930910996661 CrossrefGoogle Scholar
Yalama, A. (2013). The relationship between intellectual capital and banking performance in Turkey: evidence from panel data. International Journal of Learning and Intellectual Capital, 10(1), 71-87. DOI: https://doi.org/10.1504/IJLIC.2013.052079 CrossrefGoogle Scholar