Intellectual Capital and Financial Performance : An Evaluation of Islamic Banks in Pakistan

This study seeks to investigate the relationship between intellectual capital and bank's performance in Pakistan. A sample of five major Islamic Banks in Pakistan namely Meezan Bank, Burj Bank, Dubai Islamic Bank, Bank Islami and Albaraka Bank had taken for the period of 2009 to 2014. Multiple regression analysis is used to show the relationship of intellectual capital and the bank's performance. The results suggest that the bank's performance (Return on asset, Return on equity) is positively and significantly related to the intellectual capital of Islamic Banks in Pakistan. The main components of intellectual capital that is structural capital efficiency, human capital efficiency and capital employed efficiency have significant impact on the bank's performance. Human capital efficiency and capital employed efficiency show direct association with the bank's performance whereas structural capital efficiency shows no relationship with the bank's performance in Pakistan. This is the first study to investigate the relationship between the intellectual capital and bank's performance of Islamic Banks in Pakistan