Relationship between board characteristics and banks' financial performance of Bangladesh: The moderating role of intellectual capital

This study examines the moderating role of intellectual capital in the relationship between board characteristics and financial performance, recognizing that while board characteristics such as board size, board independence, board meetings, and board gender diversity are crucial to corporate governance, and their effectiveness in driving financial performance may depend on the organization's intangible resources. The modified value-added intellectual coefficient (MVAIC) was employed to evaluate the efficiency of the intellectual capital of the sample banks. This study adopts a quantitative research approach, employing the two-step system generalized method of moments (GMM) technique to address potential endogeneity issues and ensure the robustness of the estimated relationships between board characteristics, intellectual capital, and financial performance. The findings reveal that intellectual capital significantly moderates the relationship between board characteristics and financial performance, as it strengthens the positive effects of board size, board meetings, and board gender diversity, while weakening the impact of board independence, thereby demonstrating that the influence of governance mechanisms on banks' accounting profitability is shaped by intangible resources. However, these baseline conclusions reflect accounting-based performance and are bound to the Bangladeshi banking context. This study specifically examines how intellectual capital moderates board characteristics and financial performance in the context of the Bangladeshi banking sector.