Effects of Asset Diversification and Human Capital Efficiency on Bank Performance: Evidence from Asian Countries

  • BAWONO, Suryaning (Faculty of Economics and Business, University of Merdeka Malang) ;
  • SANUSI, Anwar (Faculty of Economics and Business, University of Merdeka Malang) ;
  • SUPRIADI, Bambang (Faculty of Economics and Business, University of Merdeka Malang) ;
  • TRIATMANTO, Boge (Faculty of Economics and Business, University of Merdeka Malang) ;
  • WIDARNI, Eny Lestari (Faculty of Economics and Business, University of Merdeka Malang)
  • Received : 2022.10.10
  • Accepted : 2023.01.15
  • Published : 2023.01.30


This study seeks to determine if the efficiency of bank human resources, as played by human capital, impacts the performance and diversification of banks. This study uses secondary data from data obtained from 385 commercial banks in 33 countries in Asia during the 2010-2020 period with the diversification analysis method. We use the Z-score to measure the amount of standard deviation that must be from earnings (ROAA). We examined it using the Tobit regression technique. According to the regression estimation results, human capital has a significant role in the performance and effective diversification of Asian banks. The human capital efficiency coefficient (HCE) is significantly negative with the cost-to-income ratio (CTIR) and significantly positive with Profitability, Financial Stability, and cost efficiency score. The level of efficiency of human resources has an effective role in increasing human capital which has an impact on bank diversification and performance. The development of human resources in a human capital framework plays an important role in the diversification and improvement of bank performance. Human capital has a significant role in the performance and effective diversification of Asian banks. The level of efficiency of human resources has an effective role in increasing human capital which has an impact on bank diversification and performance.



  1. Agyemang, O. S., Ansong, A., & Agyei-Mensah, B. K. (2019). Corporate governance models and applications in developing economies. Pennsylvania, United States: IGI Global.
  2. Ahmed, M., Zehou, S., Raza, S. A., Qureshi, M. A., & Yousufi, S. Q. (2020). Impact of CSR and environmental triggers on employee green behavior: The mediating effect of employee well-being. Corporate Social Responsibility and Environmental Management, 27(5), 2225-2239.
  3. Aiginger, K., & Rodrik, D. (2020). Rebirth of industrial policy and an agenda for the twenty-first century. Journal of Industry, Competition, and Trade, 20(2), 189-207.
  4. Ali, B. J., & Anwar, G. (2021). Intellectual capital: A modern model to measure the value creation in A business. International Journal of Engineering, Business, and Management, 5(2), 31-43.
  5. Alqershi, N. A., Abas, Z. B., & Mokhtar, S. S. M. (2021). The intervening effect of structural capital on the relationship between strategic innovation and manufacturing SMEs performance in Yemen. Management Science Letters, 11(1), 21-30.
  6. Anwar, M., Khan, S. Z., & Khan, N. U. (2018). Intellectual capital, entrepreneurial strategy, and new ventures performance: Mediating role of competitive advantage. Business and Economic Review, 10(1), 63-94.
  7. Danish, B., M. A., Mahmood, N., & Zhang, J. W. (2019). Effect of natural resources, renewable energy and economic development on CO2 emissions in BRICS countries. Science of the Total Environment, 678(1), 632-638.
  8. Barma, N. H. (2021). Do petroleum rents fuel conflict in developing countries? A case study of political instability in Timor-Leste. Energy Research and Social Science, 75(1), 1-10.
  9. Cardoso, J. S., Silva, V., Rocha, R. C., Hall, M. J., Costa, M., & Eusebio, D. (2021). Ammonia as an energy vector: Current and prospects for low-carbon fuel applications in internal combustion engines. Journal of Cleaner Production, 296(1), 1-10.
  10. Chaminade, C., & Catasus, B. (2007). Intellectual capital revisited: Paradoxes in the knowledge-intensive organization. Cheltenham, United Kingdom: Edward Elgar Publishing.
  11. Chams, N., & Garcia-Blandon, J. (2019). On the importance of sustainable human resource management for the adoption of sustainable development goals. Resources, Conservation and Recycling, 141(1), 109-122.
  12. Che, X., & Liebenberg, A. P. (2017). Effects of business diversification on asset risk-taking: Evidence from the U.S. Property-liability insurance industry. Journal of Banking and Finance, 77(77), 122-136.
  13. Cooper, B., Wang, J., Bartram, T., & Cooke, F. L. (2019). Well-being-oriented human resource management practices and employee performance in the Chinese banking sector: The role of social climate and resilience. Human Resource Management, 58(1), 85-97.
  14. Coscieme, L., Mortensen, L. F., Anderson, S., Ward, J., Donohue, I., & Sutton, P. C. (2020). Going beyond gross domestic product as an indicator to bring coherence to the sustainable development goals. Journal of Cleaner Production, 248, 1-8.
  15. Dell'Anno, R. (2020). Reconciling empirics on the political economy of the resource curse hypothesis. Evidence from long-run relationships between resource dependence, democracy, and economic growth in Iran. Resources Policy, 68(1), 1-10.
  16. Dunford, M. (2021). China's belt and road initiative and its implications for global development. Acta Via Serica, 6(1), 91-118.
  17. Entele, B. R. (2021). Impact of institutions and Ict services in avoiding resource curse: Lessons from the successful economies. Heliyon, 7(2), e05961.
  18. Fahimi, A., Akadiri, S. S., Seraj, M., & Akadiri, A. C. (2018). Testing the role of tourism and human capital development in economic growth: A panel causality study of microstates. Tourism Management Perspectives, 28(10), 62-70.
  19. Gill, I. S., Izvorski, I., Eeghen, W. V., & De Rosa, D. (2014). Diversified development: Making the most of natural resources in Eurasia. Washington DC: World Bank.
  20. Ghorbel, A., & Jeribi, A. (2021). Investigating the relationship between the volatilities of cryptocurrencies and other financial assets. Decisions in Economics and Finance, 44(2), 817-843.
  21. Hamadamin, H. H., & Atan, T. (2019). The impact of strategic human resource management practices on competitive advantage sustainability: The mediation of human capital development and employee commitment. Sustainability, 11(20), 1-19.
  22. Han, I., Liang, H.-Y., & Chan, K. C. (2016). Locational concentration and institutional diversification: Evidence from foreign direct investments in the banking industry. North American Journal of Economics and Finance, 38, 185-199.
  23. Hao, Y., Ba, N., Ren, S., & Wu, H. (2021). How does international technology spillover affect China's carbon emissions? A new perspective through intellectual property protection. Sustainable Production and Consumption, 25(1), 577-590.
  24. Harimaya, K., & Ozaki, Y. (2021). Effects of diversification on Bank efficiency: Evidence from shrinking banks in Japan. International Review of Economics and Finance, 71(1), 700-717.
  25. Hemchi, M. (2022). Global south studies on civil society. Almuntaqa, 5(1), 29-48.
  26. Jaskova, D. (2019). Assessment of social development in Slovakia in the context of human resources. Central European Journal of Labour Law and Personnel Management, 2(2), 21-32.
  27. Johnsson, F., Kjarstad, J., & Rootzen, J. (2019). The threat to climate change mitigation is posed by the abundance of fos0sil fuels. Climate Policy, 19(2), 258-274.
  28. Kashyap, A. K., & Tomar, A. S. (2016). Financial market regulations and legal challenges in South Asia. Pennsylvania, United States: IGI Global.
  29. Khan, A., Hassan, M. K., Maroney, N., Boujlil, R., & Ozkan, B. (2020). Efficiency, diversification, and performance of the US banks. International Review of Economics and Finance, 67(5), 101-117.
  30. Khanna, A. (2020). Impact of migration of labor force due to global Covid-19 pandemic with reference to India. Journal of Health Management, 22(2), 181-191.
  31. Kim, J., & Kim, Y. C. (2020). Heterogeneous patterns of income diversification effects in U. S. Bank Holding companies. International Review of Economics and Finance, 69, 731-749.
  32. Kireyev, A. (2020). Diversification in the Middle East: From crude trends to refined policies. Extractive Industries and Society, 112, 100701.
  33. Kumar, V., Thrikawala, S., & Acharya, S. (2021). Financial inclusion and Bank profitability: Evidence from A developed market. Global Finance Journal, 561, 100609.
  34. Kryscynski, D., Coff, R., & Campbell, B. (2021). Charting A path between firm-specific incentives and human capital-based competitive advantage. Strategic Management Journal, 42(2), 386-412.
  35. Madani, R. A. (2019). Analysis of educational quality, A goal of education for all policy. Higher Education Studies, 9(1), 100-109.
  36. Mahmood, N., Wang, Z., & Hassan, S. T. (2019). Renewable energy, economic growth, human capital, and CO2 emission: An empirical analysis. Environmental Science and Pollution Research International, 26(20), 20619-20630.
  37. Margherita, E. G., & Bua, I. (2021). The role of human resource practices for the development of Operator 4.0 in Industry 4.0 organizations: A literature review and A research agenda. Businesses, 1(1), 18-33.
  38. Melnyk, N., Maksymchuk, B., Gurevych, R., Kalenskyi, A., Dovbnya, S., Groshovenko, O., & Filonenko, L. (2021). The establishment and development of professional training for preschool teachers in Western European countries. Revista Romaneasca Pentru Educatie Multidimensionala, 13(1), 208-233.
  39. Mihardjo, L. W. W., Jermsittiparsert, K., Ahmed, U., Chankoson, T., & Iqbal Hussain, H. I. (2020). Impact of key HR practices (human capital, training, and rewards) on service recovery performance with mediating role of employee commitment of the takaful industry of the Southeast Asian region. Education + Training, 63(1), 1-21.
  40. Mousa, S. K., & Othman, M. (2020). The impact of green human resource management practices on sustainable performance in healthcare organizations: A conceptual framework. Journal of Cleaner Production, 243(1), 1-11.
  41. Le, T.H ., Nguyen, C. P., Su, T. D., & Tran-Nam, B. (2020). The Kuznets curve for export diversification and income inequality: Evidence from A global sample. Economic Analysis and Policy, 65(3), 21-39.
  42. Li, X., Feng, H., Zhao, S., & Carter, D. A. (2021). The effect of revenue diversification on Bank profitability and risk during the Covid-19 pandemic. Finance Research Letters, 12, 43.
  43. Li, L., & Zhang, Y. (2013). Are there diversification benefits of increasing noninterest income in the Chinese banking industry? Journal of Empirical Finance, 24(12), 151-165.
  44. Lu, W., & Mieno, F. (2020). Impact of foreign entry into the banking sector: The case of Thailand in 1999-2014. Pacific-Basin Finance Journal, 64(12), 2020, 101424.
  45. Meles, A., Porzio, C., Sampagnaro, G., & Verdoliva, V. (2016). The impact of the intellectual capital efficiency on commercial banks performance: Evidence from the US. Journal of Multinational Financial Management, 36(9), 64-74.
  46. Mimouni, K., Smaoui, H., Temimi, A., & Al-Azzam, M. (2019). The impact of Sukuk on the performance of conventional and Islamic Banks. Pacific-Basin Finance Journal, 54(2), 42-54.
  47. Nguyen, J., Parsons, R., & Argyle, B. (2021). An examination of diversification on bank profitability and insolvency risk in 28 financially liberalized markets. Journal of Behavioral and Experimental Finance, 29(29), 1-13.
  48. Ologunde, I. A., Kapingura, F. M., & Sibanda, K. (2020). Sustainable development and crude oil revenue: A case of selected crude oil-producing African countries. International Journal of Environmental Research and Public Health, 17(18), 1-10.
  49. Paltrinieri, A., Dreassi, A., Rossi, S., & Khan, A. (2020). Risk-adjusted Profitability and stability of Islamic and conventional banks: Does revenue diversification matter? Global Finance Journal, 2(01), 1-13.
  50. Petras, M. (2020). Increasing Profitability through contingent convertible capital: Empirical evidence from European banks. Global Finance Journal, 125, 100582.
  51. Phan, H. T., Anwar, S., Alexander, W. R. J., & Phan, H. T. M. (2019). Competition, efficiency, and stability: An empirical study of East Asian commercial banks. North American Journal of Economics and Finance, 50, 100990.
  52. Podra, O., Kurii, L., Alkema, V., Levkiv, H., & Dorosh, O. (2020). Theoretical aspects of human capital formation through human potential migration redistribution and investment process. Business: Theory and Practice, 21(1), 71-82.
  53. Popescu, C. R. G. (2020). Sustainability assessment: Does the Oecd/G20 inclusive framework for BEPS (base erosion and profit shifting project) put an end to disputes over the recognition and measurement of intellectual capital? Sustainability, 12(23), 1-22.
  54. Pokrovskaia, N. N., Korableva, O. N., Cappelli, L., & Fedorov, D.A. (2021). Digital regulation of intellectual capital for open innovation: Industries' expert assessments of tacit knowledge for controlling and networking outcome. Future Internet, 13(2), 1-27.
  55. Pritvorova, T., Tasbulatova, B., & Petrenko, E. (2018). Possibilities of blitz-psychodramas as a tool for human resource management in the supporting system of the hardiness of the company. Entrepreneurship and Sustainability Issues, 6(2), 840-853.
  56. Ramaswamy, K., Purkayastha, S., & Petitt, B. S. (2017). How do institutional transitions impact the efficacy of related and unrelated diversification strategies used by business groups? Journal of Business Research, 72(3), 1-13.
  57. Reinhart, C. M., & Rogoff, K. S. (2013). Banking crises: An equal opportunity menace. Journal of Banking and Finance, 37(11), 4557-4573.
  58. Richards, T. (2014). Investing psychology: The effects of behavioral finance on investment choice and bias. NJ: John Wiley & Sons.
  59. Ruparel, N., Dhir, A., Tandon, A., Kaur, P., & Islam, J. U. (2020). The influence of online professional social media in human resource management: A systematic literature review. Technology in Society, 63(1), 1-11.
  60. Santoso, W., Yusgiantoro, I., Soedarmono, W., & Prasetyantoko, A. (2021). The bright side of market power in Asian banking: Implications of bank capitalization and financial freedom. Research in International Business and Finance, 56, 1-13.
  61. Setyawati, I., Widyastuti, T., Suryati, A., & Hartani, N. H. (2019). Intellectual capital performance of Islamic banks in Indonesia: Towards competitive advantages. Management Science Letters, 9(12), 1999-2008.
  62. Shamsuzzaman, M. M., Hoque Mozumder, M. M. H., Mitu, S. J., Ahamad, A. F., & Bhyuian, M. S. (2020). The economic contribution of fish and fish trade in Bangladesh. Aquaculture and Fisheries, 5(4), 174-181.
  63. Sima, V., Gheorghe, I. G., Subic, J., & Nancu, D. (2020). Influences of the Industry 4.0 revolution on the human capital development and consumer behavior: A systematic review. Sustainability, 12(10), 1-28.
  64. Solangi, Y. A., Longsheng, C., & Shah, S. A. A. (2021). Assessing and overcoming the renewable energy barriers for sustainable development in Pakistan: An integrated Ahp and fuzzy Topsis approach. Renewable Energy, 173(1), 209-222.
  65. Stadler, E., Rowell-Rahier, M., & Baur, R. (2012). Insects-plant relationship. Cham: Springer.
  66. Sulisnaningrum, E., Widarni, E. L., & Bawono, S. (2022). Causality relationship between human capital, technological development, and economic growth. Journal of Management, Economics, and Industrial Organization, 6(2), 1-12.
  67. Tien, N. H., Jose, R. J. S., Ullah, S. E., & Sadiq, M. (2021). Development of human resource management activities in Vietnamese private companies. Turkish Journal of Computer and Mathematics Education (Turcomat), 12(14), 4391-4401.
  68. Tvaronaviciene, M., Mazur, N., Mishchuk, H., & Bilan, Y. (2022). Quality of life of the youth: Assessment methodology development and empirical study in human capital management. Economic Research, 35(1), 1088-1105.
  69. Vasiljeva, M. V., Ponkratov, V. V., Vatutina, L. A., Volkova, M. V., Ivleva, M. I., Romanenko, E. V., Kuznetsov, N. V., Semenova, N. N., Kireeva, E. F., Goncharov, D. K., & Elyakova, I. D. (2022). Crude oil market functioning and sustainable development goals: Case of OPEC participating countries. Sustainability, 14(8), 1-23.
  70. Weng, T. C., & Chi, H. Y. (2019). Family succession and business diversification: Evidence from China. Pacific-Basin Finance Journal, 53(2), 56-81.
  71. Widarni, E. L., & Bawono, S. (2021). Human capital, technology, and economic growth: A case study of Indonesia. Journal of Asian Finance, Economics, and Business, 8(5), 29-35.
  72. Widarni, E. L., & Wilantari, R. N. (2021). The relationship between human capital development and economic growth: Evidence from Malaysia. Journal of Asian Finance, Economics, and Business, 8(6), 641-650.
  73. Wu, J., Chen, L., Chen, M., & Jeon, B. N. (2020). Diversification, efficiency, and risk of banks: Evidence from emerging economies. Emerging Markets Review, 45(12), 2020, 100720.
  74. Xiao, H., Ren, T., Zhou, Z., & Liu, W. (2020). Parameter uncertainty in the estimation of portfolio efficiency: Evidence from an interval diversification-consistent Dea approach. Omega, 14, 102357.
  75. Xu, J., & Wang, B. (2018). Intellectual capital, financial performance and companies' sustainable growth: Evidence from the Korean manufacturing industry. Sustainability, 10(12), 1-15.
  76. Yong, J. Y., Yusliza, M. Y., Ramayah, T., Chiappetta Jabbour, C. J., Sehnem, S., & Mani, V. (2020). Pathways towards sustainability in manufacturing organizations: Empirical evidence on the role of green human resource management. Business Strategy and the Environment, 29(1), 212-228.
  77. Yuan, B., Xia, H., & Guo, C. (2020). An evaluation index system for intellectual capital evaluation based on machine learning. Alexandria Engineering Journal, 2(60), 1519-1524.
  78. Zhang, J., Hartarska, V., & Malikov, E. (2020). Product and geographic market diversification in U.S. Banking. Finance Research Letters, 16, 101881.