Does Intellectual Capital Explain the Financial Performance of Malaysia MFIs?

  • Maryam jameelah Hashim
  • Syed Musa Alhabshi
  • Nor Irvoni Mohd Ishar

Abstract

The performance of microfinance institutions (MFIs) is crucial for ensuring
the efficient utilisation of funds deposited into the microfinance programme
by donors, as well as for assisting regulators in monitoring the institutions.
Assessing the performance of MFIs involves examining its development
towards accomplishing its goals. Therefore, MFIs need to ascertain the
challenges to maintain their sustainability and sustain their operations.
Additionally, MFIs should focus on aspects such as intellectual capital
(IC) to ensure future sustainability. The aim of this research is to examine
how IC dimensions, specifically, customers, structure, human, and social
capital, influence MFIs performance. A cross-sectional survey design was
used to gather data from 145 managers (48% response rate) from MFIs in
Malaysia. In order to determine the sample size of the study, a purposive
sampling method was employed. The research model was analysed by
using Partial least square-structural equation (PLS-SEM). Subsequently,
the research model was validated using Smart PLS 3.2.5 and the proposed
study hypothesis. The findings confirm that structural capital and customer
capital positively influence the performance of MFIs, except for social and
human capital. The research model explains 67.6% of the substantial amount
of variance in MFIs performance. This research theoretically contributes
to the extension of resource-based view (RBV) and social capital theory in
Does Intellectual Capital Explain the Financial
Performance of Malaysia MFIs?
Maryam Jameelah Hashim1, Syed Musa Alhabshi1, Nor Irvoni Mohd Ishar2
1Islamic Banking and Finance, International Islamic University Malaysia
2Faculty of Business & Management, Universiti Teknologi MARA, Puncak Alam,
Selangor, Malaysia
E-mail: jamieniz@yahoo.com, syedmusa@iium.edu.my, irvoni@salam.uitm.edu.my
Received: 5 June 2018
Accepted: 18 September 2018
2
Social and Management Research Journal
predicting the sustainability of MFIs. All the factors of IC were confirmed to
improve the performance of MFIs. This study proposed several remarkable
recommendations for microfinance institutions which suggested that MFIs’
managers should resolve their organisational issues promptly. Furthermore,
they should portray sensible consideration for their institutions by taking
care of IC and encouraging the practice of recognising intangible assets,
especially their employees’ expertise and capabilities.

Published
2018-12-03
How to Cite
HASHIM, Maryam jameelah; ALHABSHI, Syed Musa; MOHD ISHAR, Nor Irvoni. Does Intellectual Capital Explain the Financial Performance of Malaysia MFIs?. Social and Management Research Journal, [S.l.], v. 15, n. 2, p. 1-23, dec. 2018. ISSN 0128-1089. Available at: <https://myjms.mohe.gov.my/index.php/SMRJ/article/view/4967>. Date accessed: 17 july 2024. doi: https://doi.org/10.24191/smrj.v15i2.4967.

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