Evaluating the efficiency of investment in human capital and its impact on the financial performance of Iraqi banks using the HCROI (Return on Investment) indicator: An applied study on a sample of private banks

Abstract

This research aims to evaluate the efficiency of investment in human capital and its impact on the financial performance of Iraqi banks, using the Human Capital Return on Investment (HCROI) as a quantitative tool to measure the productivity of spending on human resources. The research relied on published financial data from several Iraqi banks, where the HCROI was calculated and correlated with the two traditional financial performance indicators: Return on Assets (ROA) and Return on Equity (ROE). The research findings were applied using a descriptive-analytical approach, employing comparative analysis techniques to highlight differences in the efficiency of human capital investment among the banks studied and to analyze the nature of the relationship between HCROI and financial performance indicators. The results showed a generally positive relationship between the efficiency of human capital investment and financial performance. Banks with higher HCROI values ​​achieved better ROA and ROE levels, while a decrease in this indicator was associated with a decline in financial performance.