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The Impact of Intellectual Capital Formation and Knowledge Economy on Banking Performance: A Case Study of GCC's Conventional and Islamic Banks

Akkas, E. and Asutay, M. (2022) 'The Impact of Intellectual Capital Formation and Knowledge Economy on Banking Performance: A Case Study of GCC's Conventional and Islamic Banks.', Journal of Financial Reporting and Accounting .


Purpose: This paper aims to evaluate the impact of intellectual capital in terms of human capital, structural capital, and capital employed on the financial performance of Islamic and conventional banks in the GCC countries. Design/methodology/approach: Along with the measurement discussion, the empirical analysis examines the relationship between intellectual capital measured through VAIC and the financial performance of banks in the GCC states by conducting a panel of six GCC countries, including 24 Islamic banks and 32 conventional banks covering 2012-2020 period. Findings: This paper shows that while Islamic banks have similar VAIC, HCE, and CEE results to conventional banks, Islamic banks have lagged behind conventional banks regarding the impact of structural capital on financial performance. It is argued that this is in contradiction with Islamic ontology and epistemology, which essentialises intellectual capital formation. Originality: This study conducts a comparative examination of the intellectual capital performance and its impact on financial performance by using interaction variables to capture any differences between Islamic banks and conventional banks in the GCC countries. The paper also considers the knowledge economy impact as a novelty, which is prominent for the GCC countries. In addition, Islamic ontology’s essentialisation of knowledge and its articulation in the form of intellectual capital within modern understanding is widely discussed, as part of originality. Lastly, the findings are located within Islamic ontology and epistemology. Practical Implications: Islamic banks should promote research and development for their intellectual capital at the product, operational and institutional levels, since Islamic banking is considered an alternative financing method, incorporating a new form of knowledge-based institutions inspired by capitalist institutions.

Item Type:Article
Full text:(AM) Accepted Manuscript
Available under License - Creative Commons Attribution Non-commercial 4.0.
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Publisher statement:This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact
Date accepted:15 January 2022
Date deposited:20 January 2022
Date of first online publication:10 February 2022
Date first made open access:15 June 2022

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