Intellectual capital and financial sustainability in Indonesian commercial banks with profitability and risk management as mediating mechanisms

Abstract Banks are now dependent on non-physical assets that create long-term competitive advantage in today’s rapidly changing digital landscape. The Strategic Use of Intangible Resources is one such asset, encompassing the Human, Relational & Structural Dimensions of Intellectual Capital (IC) as identified by the RBV. Although prior research has found varying degrees of positive impact on Bank Performance, this variation may be due to differing performance measures used and a lack of clear differentiation regarding how these intangibles provide financial value. This study examines the relationship between IC and the operating and financial self-sufficiency of 45 Indonesian commercial banks over 2017–2024, while profitability and risk management are evaluated as alternative transmission mechanisms. Using panel-data regression and mediation analysis, financial sustainability is operationalized through Operating Self-Sufficiency (OSS) and Financial Self-Sufficiency (FSS). The results show that IC is positively associated with both OSS and FSS. Profitability provides a statistically significant indirect pathway, whereas the ERMI-based risk-management pathway is not statistically supported. These contrasting results indicate that the effects of IC are mechanism-dependent rather than uniform, suggesting that mixed findings in prior studies may partly reflect differences in performance outcomes, transmission mechanisms, and measurement approaches. The findings extend RBV by showing that the value of intellectual resources depends on how they are converted into specific financial outcomes.