This study examines the impact of human capital
efficiency (HCE) on the financial performance of Saudi banks. Human capital has
become one of the most important strategic resources for enhancing
organizational competitiveness and long-term value creation, particularly in
knowledge-intensive industries such as banking. Using panel data from listed
Saudi banks over the period 2015–2024, this study measures human capital
efficiency using the Value Added Intellectual Coefficient (VAIC™) methodology.
Financial performance is evaluated through profitability indicators, including
Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS.
Panel regression models are employed to analyze the relationship while
controlling for bank-specific characteristics such as size, capital adequacy,
leverage, and liquidity.
The
findings demonstrate that higher human capital efficiency contributes
positively to bank financial performance, suggesting that investments in
employee knowledge, skills, and capabilities create sustainable competitive
advantages. The results provide practical implications for bank managers and
policymakers by emphasizing the importance of developing human capital to
improve operational efficiency and profitability. This study also contributes
to the growing literature on intellectual capital by providing empirical
evidence from the Saudi banking sector within the context of Saudi Vision 2030.
