Research On The China's Commercial Bank Performance Evaluation System

With the deepening of Chinese economic system reform and the change of external environment for China entering WTO, the Chinese commercial banks are facing unprecedented competition pressure. Improving the bank business model and setting up effective performance evaluation system is a topic that is rich with the challenge.In this paper, on base of theoretical research on domestic and international performance evaluation system, in accordance with development-direction and requsets of the modern commercial bank, good management ideas and methods of the foreign advanced commercial bank are adopted to modulate and improve our banks'current performance evaluation system. There is a pressing need for a set of widely accepted metrics which managers and investors can rely on to measure the value creation in banks.Our performance indexs ought to include financial and non-financial, outcome measures and the performance drivers of those outcomes, short-term and long-term objectives, objective and subjective measures. As a result, the balanced performance evaluation index system can serve as the focal point for the organization's efforts, making managers can guide the energies, the abilities, and knowledges towards achieving the firm's long-term goals, defining and communicating priorities to managers, employees, investors, even customers, and can be used as a communication, information, and learning system.For long time, China's commercial banks have paid great attention to system of single financial index oriented business examination. The financial index carries on the performance evaluation under this kind of system, emphasizing shareholder's value too much, over-emphasizing the short-term benefits, certainly will cause bank to conduct the short-term actions between manager and employees. Therefore, with creative spirit, china's banks should set up strategic comprehensive management performance evaluation index system, according to the principle of Balanced Scorecard, which emphasizes the financial results and future direction by means of both financial index and non-financial index.Firstly, commercial banks define developing-stage of us, expounding strategic goals in line with the different development phase. Secondly, performance evaluation system is built under guidance of definitely strategic goals. Indexs in this system should include financial and non-financial measures. Thirdly, in order to offset the deficiency of existing profitability performance evaluation index system in our commercial banks, EVA (economic value added) should be taken as the core of financial index system. At the same time, financial indexs should be selected through the factor decomposition which focuses on efficiency, profitability, liquidity and continuous development, and allocate different ratio for these factors by sensitive analysis. The last, for non-financial sectors'strategic performance evaluation index system of commercial bank, which is discussed in customer, inside control and study&development aspects.In conclusion, the whole system is the combination of financial and non-financial index, which has the cause and effect relationship according to the thought of the Balanced Scored card.