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ABSTRACT:

The study aims to investigate the effect of Intellectual Capital on the Financial Performance of Banking Industries in Indonesia. Based on the data of 47 Banks listed on the Indonesia Capital Market in 2021, by using multiple regression to examine the impact of modified intellectual capital on financial performance. This study uses the purposive sampling method. Intellectual capital is measured by VAIC, RCE, and InnovationCE, and Financial Performance using Return on Assets (ROA). The findings show that CEE and HCE have a positive influence on ROA, but unfortunately, SCE, RCE, and InCE do not affect the ROA. This finding shows that the bank needs to improve its skills in managing intellectual capital, especially related to SCE, RCE, and InCE. The more they manage their intellectual capital efficiency, in order to increase their financial performance.

KEYWORDS:

Financial Performance, Intellectual Capital, ROA, VAICTM

JEL Classification:

E22, E24, O34

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