Investigating the Effect of Intellectual Capital on Bank Performance in Malaysia

The purpose of this paper is to investigate the state of intellectual capital among the banks in Malaysia, and to examine its consequent effect on bank business performance. The study employed the quantitative approach through a survey instrument design. The population was the branch managers of domestic banks in Malaysia, and they were chosen because these banks have extensive branch networks, even in rural areas. Data were collected using questionnaires, and the constructs used were developed from prior research and previously tested for reliability. A total of 1844 questionnaires were mailed to the respondents, and 260 usable responses were received, giving a response rate of 14.09 percent. Descriptive statistics were used to analyze the characteristics of the respondents including frequency, mean, and measures of reliability, while multivariate technique employed was multiple regressions. The findings revealed that significant relationships exist between human and structural capitals and bank performance, while no significant relationship was found between relational capital and bank performance These findings may be of help to bank managers to utilize more of their internal resources to compete and survive the intensely competitive business environment.