Valuation Of Commercial Banks Explore

I. SignificanceCompany valuation is not a new issue. It originated from the beginning of twentith century. In 1906 Fisher published the book"the nature of capital and income", which formed the basis of the theories of company valuation. In 1960s, Modigliani and Miller's two paper"capital cost, financing and investment theory"and"dividend policy, growth and stock price"developed modern theories of company valuation. The CAPM and APM theories thereafter made the company valuation further come to reality. Nowadays, four main valuation methods----Asset Valuation, Comparision Valuation, DCF Method and Option Method are widely applied in the areas of corporate investment, financing, value management, achievement valuation and strategy-making.Research on commercial bank valuation has following theoretical and practical significance.First, it helps to disclose the value structure of commercial banks from the theoretical aspect. Comparing to common companies, commercial bank runs the different business which is more related to risk. The value of commercial bank has more to do with the management and control of risk. Furthermore, commercial banks have special value, because they play very important role in social economy. The analysis of commercial bank value can find out the operation characteristics of commercial bank, therefore help to promote the value of commercial banks.Second, it helps to set up right business target and to implement the strategic plan and decision. The business target of western companies has more and more focused on the value maximization after experiencing the profit maximization and stockholder's wealth maximization. While our financial companies, especially the commercial banks, have not very clear business targets, which inludes both economic motives, like profit maximization, lowering the NOL rate and increasing volume of deposit and loan, and some political tasks. After entering into WTO, Chinese commercial banks are exposed to fiercer competition. Value-maximization-guided business target will lead to increase of their...