The Impact of Intellectual Capital on Bank Risk: Evidence from Indian Banking Sector

The IUP Journal of Financial Risk Management, Vol. XI, No. 3, September 2014, pp. 18-38

Posted: 22 Jul 2015

Date Written: July 20, 2015

Abstract

This study is a modest attempt to examine the impact of Intellectual Capital Efficiency (ICE) and its components — Human Capital Efficiency (HCE) and Structural Capital Efficiency (SCE) — on credit and insolvency risks of Indian commercial banks during the period 1998-99 to 2011-12. Employing panel data technique, the study finds that IC is inversely associated with credit risk. Among the components, HCE is significantly and negatively related to credit risk. The study also finds greater influence of ICE and HCE on credit risk of public sector banks than that of private sector banks. It is also evident that large banks are more efficient in utilizing IC in managing credit risk, while small banks depend on capital adequacy ratio. Regarding the influence of IC on banks’ insolvency risk, the present effort fails to arrive at any definite conclusion.

Suggested Citation

Ghosh, Santanu Kumar and Maji, Santi, The Impact of Intellectual Capital on Bank Risk: Evidence from Indian Banking Sector (July 20, 2015). The IUP Journal of Financial Risk Management, Vol. XI, No. 3, September 2014, pp. 18-38, Available at SSRN: https://ssrn.com/abstract=2633458

Santanu Kumar Ghosh (Contact Author)

University of Burdwan, India ( email )

Golapbag
Burdwan-713104
Burdwan, IN West Bengal 713104
India

Santi Maji

Independent ( email )

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