DOI: https://doi.org/10.36347/sjebm.2026.v13i01.003

Pages: 14-23

Modern businesses are characterized by innovation, technological advancement, skills and knowledge management. The success of a firm is hinged on continual innovation, rely on new technologies and leverage on skills and knowledge development for the employees rather than physical assets such as plant or machinery to improve performance. Human Capital is therefore the cornerstone of the growth of firms and the economy at large. Thus, knowledge has become the new frontier in corporate management because, value can be generated through intangible assets not often reflected in the financial statements. Human Capital is an integral intangible asset in any organization. The use of the Value Added Intellectual Coefficient (VAICTM) model has been widely used to measure the contribution of intangible assets on the performance of firms. Consequently, understanding Human Capital Efficiency is an integral part of firm performance. The banking sector in Kenya is highly competitive, with each player striving to achieve high profitability. Yet, to succeed in such an environment, creativity, innovation, skills and efficiency is imperative. This study examined the influence of Human Capital Efficiency (HCE) on performance of listed commercial banks listed on the Nairobi securities exchange for the period 2013 to 2022 with specific emphasis on the VAICTM model. The Linear Regression Model was adopted. The results show that there is no significant relationship between ROA and Human Capital Efficiency, P = 0.071> 0.005 with R- Square of 27.5% implying that the variability in ROA in the banking sector is least determined by the listed predictor variables. This result is also supported by the ANOVA results, P = 0.071> 0.005, F=1.993. Further, the results also showed that there is a significant relationship between ROE and Human Capital efficiency P = 0.000<0.005 with R- Square of 57.3% implying that the variability in ROE in the banking sector is determined by the listed predictor variab