Examining the effect of intellectual capital efficiency on microfinance institutions’ performance: the case of a developing economy

Purpose The study examined the role intellectual capital efficiency (ICE) plays in the financial performance of microfinance institutions (MFIs). Design/methodology/approach Data for the study were extracted from the audited annual reports of microfinance and savings and loans institutions in Ghana’s financial sector for the period 2009–2023. Empirical result was estimated using generalized method of moments (GMM). Findings In overall terms, the study empirically confirmed that financial performance in MFIs in Ghana responds positively to ICE. That is, increase in financial performance in MFIs is achieved in the presence of increasing ICE. Practical implications The key implication of the research findings is that knowledge-based institutions like MFIs, particularly in a developing context like Ghana cannot overlook and downplay the relevance of intellectual capital in delivering organizational success. Originality/value The financial sector, and by extension the banking sector in Ghana recently went through a crisis that saw the exodus of a number of banking institutions and MFIs. This study provides empirical evidence for the first time from the Ghanaian context that MFIs can improve their performance by enhancing their ICE.