The Value-Added Analysis of Intellectual Capital for Banking Financial Performance

This study was conducted to see how intellectual capital (IC) affects company performance (ROA)by entering the size variable in its calculations. This study also analyzes how much financial performancechanges occur as an effect of the efficiency of the use of capital employees (CEE), the efficiencyof using Structural Capital (SCE), and the partial efficiency of using Human Capital (HCE).Research was conducted on conventional banking in Indonesia for the period 2013 - 2017. Theresearch data was obtained from the official website of the Indonesia Stock Exchange (IDX). Thisstudy found that VAIC had a significant positive effect on ROA, and from the three IC components itturned out that the CEE component had the greatest influence on ROA


INTRODUCTION
Information development makes business patterns begin to change. The power of globalization, financial innovation and progress information technology guide banks to follow aggressive business strategies to reinforce their bottom-line (Saif, 2018). What we are experiencing now is a dramatic shift from material sources to knowledge, from hardware to software. At the time of expansion and growth based on new knowledge of "factors of production" which have replaced energy from artificial and natural energy to a certain extent which aims to replace routine work and finally physical capital (Pulic, 1998).
Technological advances have changed the financial services industry very quickly.
Such progress is not accompanied by regulation and understanding of technology and its impact on the financial sector (Lucey et al., 2018).

According to Edvinson Intellectual
capital is an intangible asset that is explicitly not contained in financial statements but has an impact on financial performance and is a relationship between employee, idea and information (Edvinson, 2001). Intellectual Capital is an asset or non-monetary source without physical substance which is a fundamental factor in the process of creating corporate value. Knowledge-based companies depend primarily on the types of assets for value creation and their competitive advantage. The empirical results show that companies that have better intel-lectual capital efficiency and are able to manage intellectual capital efficiently will reach the level of efficiency according to the targets set (Mondal & Ghosh, 2015).
The debate about the results of research related to how the influence of intellectual capital on banking performance is still warm.
Nazif (Ozkan, Cakan, & Kayacan, 2017)   The effect on financial performance is positive and significant when the analysis involves the long term (Santos, Basso, & Kimura, 2018). Referring to research conducted by Pulic (Pulic, 1998(Pulic, , 2004, (Ullum, 2016), (ullum, 2017), (Ozkan, Cakan, & Kayacan, 2017 CEE is obtained by dividing CE by value added (CEE = CE / VA) while CE according to (Pulic, 2004) and (Ullum, 2016(Ullum, , 2017 is the book value of total assets. banks followed by four major banks operating in Australia. The HCE relationship is significant and has a considerable impact on bank efficiency in value creation. Efficiency in utilizing HC makes Bank Australia able to show high performance. Bank performance in terms of CEE and SCE has little or no impact on efficiency. the bank as a whole and its value creation (Joshi, Cahill, & Sidhu, 2010

RESEARCH METHODS
The data processed is banking data in Indonesia for the period 2010 to 2017. The dependent variable in this study is the bank's financial performance using a ROA proxy.
The independent variables in this study are Value added intellectual coefficient (VAIC) developed by (Pulic, 1998)  Based on the steps above, the Equations in this study can be arranged as follows: The variables used in equations 1, 2,3 and 4 are described in Table 2.

REGRESSION AND HYPOTHESIS
The regression model to be tested is divid- H2. There is a positive significant relationship between the capital employed efficiency coefficient (CEE) and financial performance (ROA).
H3. There is a positive significant relationship between the coefficients of human capital efficiency (HCE) and financial perfor- H4. There is a positive significant relationship between the coefficient of structural capital efficiency (SCE) and financial performance (ROA).