Intellectual Capital, Bank Profitability, and Bank Value

This study plans to investigate the influence of intellectual capital on bank profitability and value and bank profitability on bank market value. Furthermore, 34 banks listed on Indonesia's capital market are taken from the population by the simple random sampling technique. Path analysis model acting as the method to evaluate the variables-related data. From the hypothesis testing, this study affirms a positive impact of intellectual capital on bank profitability and value and the similar effect of bank profitability on bank value. The implications related to the application of intellectual capital in banks are attached.


INTRODUCTION
Banking is one of the industries in the capital market of Indonesia (Hartono, 2017). This industry has an outstanding contribution to the market index movement. This situation happens because some banks, i.e., PT Bank Central Asia Tbk. (BBCA), PT Bank Rakyat Indonesia (Persero) Tbk. (BBRI), PT Bank Negara Indonesia (Persero) Tbk., and PT Bank Mandiri (Persero) Tbk. (BMRI), have a significant stock market capitalization (Situmorang, 2020). As an indicator of the bank value, the stock price becomes the attention when investors want to buy or sell stocks. If they purchase shares at the right time, they will get a capital gain, and vice versa. The realized capital gain reflects the wealth of the investors (Hartono, 2017).
By mentioning the differing stimulus, this study aims to examine and analyze two influences. Firstly, the effect of intellectual capital on bank profitability and value. Secondly, the impact of profitability on bank value. The banks utilized are from the Indonesian capital market for five years, started from 2015 until 2019.
The bank is the institution counting on the intellectual capital in their business (Mavridis, 2004). According to Janosević, Dzenopoljac, & Bontis (2013), this capital consists of humans, structure, and relation (see Table one for the detail). Additionally, to measure intellectual capital, the value-added intellectual coefficient by mentioning Ulum (2009) is applied. This added value is from utilized equity, human, and structure (see formulas 1a, 1b, and 1c). The banks effectively empowering them will gain a competitive advantage (Ulum, 2009) to create profits, as shown by Zia-ul-Haq et al. (2014), Isanzu (2015), Septiana (2018), Octavio & Soesetio (2019), Ousama et al. (2020), Uslu (2020), and improve its value in the capital market, as displayed by Wijaya (2012). By denoting this explanation, the first and second hypotheses can be made like this. H1: Intellectual capital positively affects bank profitability. H2: Intellectual capital positively affects bank value.
In the dividend discount model, profitability becomes one of the fundamental ratios influencing the stock price. As the profitability proxy describing company earnings power, return on assets positively affects the stock price (Natarsyah, 2000). This evidence also gets confirmed in the studies exhausting the banks as the sample, such as

Variable Definition
The first variable is intellectual capital. Moreover, this variable performs as exogenous. This capital is measured by a value-added intellectual coefficient (VAIC). By denoting Ulum (2009), the formula to calculate it can be seen in the following equations: The second variable is profitability. Furthermore, this variable has a position as the endogenous. By following Ghauri (2014) (2020), this variable is measured by return on assets (ROA).
The third variable is the bank value. Additionally, this variable becomes endogenous. Like the firm value, the bank value can be counted by stock price (SP) by following Ghauri (2014), Hanafi (2017), and Siwal & Napit (2019). The bank stock prices are not always in the same range of value; thus, by denoting Sahabuddin dan Hadianto (2019), the logarithm natural is used. By transforming them in the logarithm natural, the residuals in equation three will be normally distributed.

Population and Samples
The  Table 2.

The method of data analysis
Based on these research intentions, a suitable method to analyze the data is the path analysis model. This model has two sub-structures, as seen in equations three and four. Furthermore, each residual in equations two and three (ɛ1 and ɛ2) is essential to be normally distributed. By denoting Ghozali (2016), the Kolmogorov-Smirnov is utilized to examine it.   Figure 1 demonstrates the result of standardized path coefficients (γ 1, γ 2, β1), including their t-statistical probability. Moreover, these probabilities are utilized to test the first, second, and third null hypotheses by comparing them with a significance level of 5%.

The estimation result of the path analysis model
As realized in figure one, the probability of the path coefficient of γ 1 and γ 2 is 0.000, and β1 is 0.024. Because these values are below the significance level of 5%, the first, second, and third hypotheses are not declined. Therefore, intellectual capital positively affects bank profitability and value. Also, profitability positively influences bank market value. From this evidence, intellectual capital is the driver of profitability creation, increasing bank value. This condition shows that the banks need to effectively use the employees to work productively by giving the training and incentive for their target achievement of lending money to borrowers and seeking money from depositors. Also, the banks are expected to provide precise career planning to motivate their employee to reach their organizational position. Related to the facilitates for their customers, banks must consider investing in the technology to realize safe, easy, and secure financial transactions.

IV. CONCLUSION AND RECOMMENDATION
This study aims to prove and analyze two matters. Firstly, the impact of intellectual capital on bank profitability and value. Secondly, the effect of profitability on bank value. Thus, to attain this purpose, statistical hypothesis testing is utilized on the bank data from the Indonesian capital market between 2015 and 2019. After doing that, the result demonstrates that: 1. Intellectual capital has a positive influence on bank profitability and value.

2.
Profitability has a positive effect on bank value.
Though these research results are satisfactory, revealed from the significant positive sign of the relationship, this research still has some boundaries, i.e., the country origin of banks utilized (see point a) and the total explaining variables (see point b). a.
As the first limitation, this study only utilizes the banks listed on the Indonesian capital market. It does not apply to the banks of various countries' stock exchange, for example, in Southeast Asia. Thus, the next scholars can combine them in their research. b.
As the second inadequacy, this study only applies one determinant of bank profitability and two bank value determinants. By considering this issue, the next scholars can add the other determining factors related to the bank features, for instance, loan to deposits ratio (LDR), non-performing loan (NPL), and bank efficiency ratio.