Abstract

In the current knowledge-based economy, the importance of intellectual capital as a factor of competitive advantage is undisputable. This is particularly true for the banking sector in which intellectual capital efficiency is critical for development of a cutting edge strategy. The purpose of the study was to measure the intellectual capital efficiency of the commercial banking sector of Malawi. The study used the value added intellectual capital coefficient (VAICTM) in order to measure performance, from 2010 to 2013 plus the performance level categorisations employed in Kamath (2007). The results indicate that the sampled commercial banks achieved on average, common performance in all the years under study, except in 2011 when they achieved good performance. Furthermore the trend analysis suggested an upward trend in terms of the level of efficiency, however at a very low rate. This suggests that the commercial banks have to put more effort to improve their intellectual capital efficiency. Furthermore, consistent with other prior studies, the study found that human capital efficiency of the sampled banks was relatively higher than structural capital and capital employed efficiencies over the entire period. This confirms the significance of human capital to value creation for the banks, hence a need for the management of the banks to pay required attention to their employees.

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