The Effect of Human Capital Efficiency on Bank Performance : Evidence from ASEAN-5 Listed Banks

Abstrak

The banking industry is the most human capital-intensive sector, yet amidst pressures for digitalization and post-pandemic efficiency, the contribution of human resources to performance is often questioned. However, empirical evidence on the effect of Human Capital Efficiency (HCE) on bank performance across ASEAN countries remains limited and yields inconsistent results. This study examines the effect of Human Capital Efficiency (HCE) on banking performance in five ASEAN countries during 2016–2024, while comparing its relative contribution to other intellectual capital components. Human capital is measured through the HCE component of the Value Added Intellectual Coefficient (VAIC) model, while performance is proxied by Return on Assets (ROA) and Return on Equity (ROE). Using panel data of 88 banks (731 bank-year observations) from Bloomberg and random effects estimation with robust clustered standard errors, HCE is found to have a positive and significant effect on bank performance. This finding is robust to alternative performance measures, intellectual capital measures, sample composition, and a one-year lag specification to mitigate simultaneity. Standardized analysis shows HCE to be the largest contributor compared to physical and structural capital. The results support the Resource-Based View and Human Capital Theory and imply that personnel costs should be viewed as a strategic investment, not simply a cost.