Reconceptualizing Intellectual Capital through Generative AI: Evidence from Sustainable Banking Performance in Saudi Listed Banks

This study examines how artificial intelligence–enabled intellectual capital can contribute to sustainable banking performance in Saudi Arabia. Building on the intellectual capital and sustainable performance literature, the paper extends the traditional Value Added Intellectual Coefficient framework by incorporating an AI-enabled digital knowledge dimension. The proposed framework combines human capital efficiency, structural capital efficiency, and capital employed efficiency with an AI-enabled intellectual capital disclosure index constructed from banks’ annual reports, sustainability reports, and digital transformation disclosures.

The AI-enabled intellectual capital disclosure index is developed using a structured content-analysis approach, in which AI-related disclosures are coded across several dimensions, including AI adoption, data analytics, automation, machine learning, digital banking, cybersecurity, fintech integration, and employee digital skills. The components are normalized and aggregated using an equal-weighting scheme, while manual verification and alternative weighting checks are used to assess validity and robustness.

Using panel data from Saudi listed banks, the study investigates whether AI-related knowledge capabilities enhance sustainable performance beyond traditional intellectual capital components. Sustainable banking performance is assessed through financial, operational, and sustainability-oriented indicators, while controlling for bank size, capitalization, risk, and macro-financial conditions. Theoretically, the study extends the intellectual capital literature by conceptualizing AI-enabled knowledge capabilities as an emerging intangible resource that complements human, structural, and capital-employed efficiency in explaining sustainable banking performance.

The paper also contributes to the growing literature on artificial intelligence in finance by providing an emerging-market perspective on how banks can transform digital and knowledge-based resources into sustainable value creation. The Saudi banking sector provides a relevant context given its strong digitalization agenda, regulatory modernization, and alignment with Saudi Vision 2030. The expected findings have practical implications for bank managers, regulators, and policymakers seeking to strengthen sustainable performance through AI adoption, knowledge management, and digital capability development.