The impact of applying human resource accounting on profitability indicators in Libyan commercial banks: A case study of the National Commercial Bank

Abstract

The study aimed to measure the impact of applying human resource accounting on profitability indicators in Libyan commercial banks, through a case study of the National Commercial Bank during the period from 2008 to 2023. The study relied on the inductive approach to determine the study variables and methods of measuring them accurately, and the deductive approach through conducting a quantitative study to test the study hypotheses and draw conclusions. The study relied on secondary data through the accounting reprocessing of the bank's financial statements according to the historical cost approach, by including human resource costs (recruitment, training, development) in the assets of the financial position statement, and then measuring the impact of this inclusion on four profitability indicators: return on assets (ROA), return on equity (ROE), return on deposits (ROD), and net interest expense to income (NIEI). The results of the t-test for correlated samples showed statistically significant differences between the original and adjusted statements, with all profitability indicators improving after the application of human resource accounting, recording medium effect sizes according to Cohen's d coefficient, indicating a moderate practical impact that reinforces the importance of the application. The study recommended seeking to systematically include human resource information in financial statements, developing the accounting information structure, issuing a unified accounting manual for the application of human resource accounting in the Libyan environment, as well as focusing on training financial cadres and strengthening the regulatory and supervisory framework. It also calls for expanding the scope of future studies to include other economic sectors.