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Intellectual capital and financial performance of private banks in Ecuador

Abstract:

This study evaluates the intellectual capital (IC) in the private banking sector of Ecuador and its impact on financial performance. Using panel data from 15 banks between 2003 and 2021 and applying the M-VAIC model to measure IC, significant trends were identified. The average M-VAIC was 2,378, with eight banks surpassing the sectorial average. Regression analyses reveal a positive correlation between IC and the indicators of Return on Assets (ROA) and Return on Equity (ROE). At the component level, physical capital leads in profitability generation, followed by human capital, while structural capital has less influence. Surprisingly, relational capital shows a negative correlation, These findings provide a profound understanding of how intangible aspects influence banking profitability over time. The analysis, unique in its panel data approach for the Ecuadorian context, contributes to the literature on knowledge management and finance, offering valuable insights for strategic decision-making in the banking sector.