The impacts of intellectual capital of microfinance institutions on poverty alleviation

Abstract

This study examines the impact of Intellectual Capital (IC) on poverty alleviation using a panel dataset of 3,114 Microfinance Institutions (MFIs) across 120 countries from 2009 - 2018. Intellectual capital is measured using the Value Added Intellectual Coefficient (VAIC), which comprises Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE), and relational Capital Efficiency (CEE). The study adopts the Generalized Method of Moments (GMM) as the primary estimation technique to address potential endogeneity and dynamic relationships. The findings indicate that overall intellectual capital positively and significantly affects poverty alleviation. However, the impacts of its components are mixed. While relational capital contributes positively to poverty reduction, human capital shows no statistically significant effect, and structural capital efficiency unexpectedly displays a negative association with poverty mitigation. As a result, rather than merely expanding human capital, emphasis should be placed on skill specialization to improve efficiency. Additionally, fostering gradual technological adoption and facilitating knowledge-sharing can help optimize structural capital deployment, ultimately enhancing poverty reduction outcomes.