Exploring the Link between Intellectual Capital, Technical Efficiency and Income Diversity and Banks Performance: Insights from Taiwan

Abstract

This research paper investigates the banking sector in Taiwan, focusing on the intricate dynamics between intellectual capital, efficiency, and performance. Utilizing a dual-method of Random Effects regression and Systems Generalized Method of Moments (SGMM) models, the study analyzes 39 Taiwanese commercial banks from 2010 to 2023. The  findings reveal that intellectual capital enhances efficiency and revenue growth but has intricate effects on profitability. Total factor productivity change and technological change present mixed, yet the nonlinear associations of leverage and income diversification emerge as significant factors. Challenging conventional wisdom within the Resource-Based Theory framework, the study uncovers profound complexities, calling for refined theoretical insights. On a practical level, the findings advocate for a comprehensive, tailored approach to enhance bank performance in Taiwan and offer valuable insights for regulatory authorities, bank managers, and investors. The research also has broader implications for other emerging economies, significantly contributing to theking efficiency, performance, resand sustainability.