Intellectual capital and bank productivity in emerging markets: evidence from Ghana

Purpose – The purpose of this paper is to examine the effect of intellectual capital on bank productivity in an emerging market in Africa. Design/methodology/approach – The Malmquist productivity index (MPI) is employed to estimate productivity growth of 18 banks in Ghana from 2003 to 2011 while the Value Added Intellectual Coefficient (VAIC) is used to measure bank intellectual capital performance. The panel-corrected standard errors estimation technique is used to estimate a panel regression model with MPI as the dependent variable. Bank market concentration and bank size are controlled for in the regression analysis. Findings – The authors find productivity growth to be largely driven by efficiency changes compared to technological changes. The results from the regression analysis indicate that VAIC has a positive effect on the productivity of banks in Ghana. The authors also find human capital efficiency and capital employed efficiency as the components of VAIC that drive productivity growth in the banking industry. Bank size and industry concentration are also identified as significant drivers of productivity in the market. Practical implications – The study’s findings support investments in intellectual capital as a means of improving the performance of banks in emerging markets. Originality/value – To the best of the knowledge, this is the first study to empirically examine the relationship between intellectual capital and productivity in an emerging banking market in Africa.