RELATIONSHIP BETWEEN INTELLECTUAL CAPITAL AND FINANCIAL PERFORMANCE OF BANKING COMPANIES IN INDIA- AN EMPIRICAL ANALYSIS

Abstract

Knowledge is an important aspect which creates competitive advantage for companies and also bring in long term sustainability .Value creation capability of Indian financial sector is highly influenced by human capital, Innovations and technological change. Knowledge economy means use of intellectual capacity as the main driver for the growth of the economy.. Focus has shifted from tangible assets to value of intangible assets in determining the true value of the firm. This paper tries to analyse role of intellectual capacity on the financial performance of banking companies in India. Intellectual capacity is examined using Value added intellectual coefficient (VAIC) measured by capital employed efficiency, human capital efficiency and structural capital efficiency. Regression model is used to analyze impact of VAIC on stock returns , share prices and net profit of selected banks . Sample data for a period of two years are taken from selected banking companies and the result shows that intellectual capital has positive impact on companies’ performance.