The financial crisis of banks (before, during and after): an intellectual capital perspective

Abstract

The purpose of this paper is to evaluate the link between intellectual capital components and financial performance across three temporal periods on either side of a financial crisis. The study offers a longitudinal approach, combining two data collecting methods. A survey on intellectual capital components was administered during the initial period followed by objective performance ratios in subsequent time periods (covering pre, during and post-financial crisis analysis). Regarding the three periods in the study, evidence seems to support the argument that intellectual capital scores are good predictors of future banking performance. One bank in particular that was ranked very low in 2005 intellectual capital scores eventually failed to survive autonomously. By 2012, it was forced to be rescued by governmental aid using public funds. Generally speaking, we can argue that intellectual capital average scores are good predictors of future banking performance. The study’s generalizability is limited to the Portuguese banking industry. This is the first academic research study to evaluate the link between intellectual capital and the financial performance of banks across three temporal periods: 2005–2006 (pre-crisis), 2007–2008 (during crisis), and 2009–10 (post-crisis).