Research On The Application Of ABC In Banking Cost Management

The competition between and among banks in China and foreign banks will become more and more dramatic after China entry into WTO. It's very critical for commercial banks to know the true costs of their products and services. Therefore, ABC may be a good tool for them.In the beginning of the 20th century, the United States carried on the research and practice to the bank cost system, and developed the more perfect cost check system. After 90's in the 20th century, with the intense competition, the urgent demand of banking was extending the market quota, declining the cost, and increasing profits at the same time, so the request of management to the cost check became more and more highly. At this time, ABC provided the good demonstration for the banking because of its successful usage in the industry realm. American banking is continuously applying ABC in the bank cost check management. The application of ABC provides relatively accurate cost information for the banking, through tracking and analyzing the activities, which are relevant to the bank products in order to remove "non-value-added" activities and improve "value-added" ones. Thus this analysis will provide the useful information, make loss and waste reduce to the lowest limit, increase scientificalness and usefulness of the decision, and strengthen the market competition ability of the bank.In the last ten years, banking in China has made a rapid progress, but in the process banking may overemphasize only in the business and market expansion of the development, neglecting the cost management. Because the cost information is very limited, it can't provide valuable information for the management decision of the bank. Under the condition that the earnings shrank increasingly, as the business enterprise, banking must pursue oneself profits to maximize by all means. Therefore, we must pay attention to the cost computation and management. At the same time, a series of modern cost management methods will be used in order to develop cost efficiency analysis.The basic analysis is used in the product analysis for observing whether it creates the profits for the bank or not. For the business expenses, the bank can non-calculate or simply calculate them to the product, so the product expenses provided are not overall. For providing the relatively accurate cost information, banking must accurately assign the expenses to the product, which can veritably reflect the earnings condition of the product. According to the basic idea of activity based costing that products consume activities and activities consume resources, the resources consumed can be reasonably and scientifically traced to the cost object through activities.ABC (Activity Based Costing) comes out as a novel cost management regulation. Its success is greatly due to have overcome computing defects of the traditional overhead expenses and have reformed product cost-computing method, which greatly be convenient for cost-management. More and more enterprises of the developed countries are paying close attention to ABC (Activity Based Costing) in order to adapt to the arrival of new technique revolution and intense market competition. ABC, however, is still explored in terms of theory in our country. Academic circles seldom study the application of ABC to our enterprises. According to the present situation, I put forward a plan for using ABC in China banking cost management on the basis of the domestic and foreign achievements in ABC. According to the foreign successful case, a plan for feasibility analyzing of the application of ABC to China banking cost management is suggested. Firstly, this thesis expounds the historical background of ABC through analyzing the inadaptability of traditional banking cost accounting methods to the variations in competition environment. Then the fundamental concept of ABC and its ordinary accounting procedure are explained and banking cost management pricing is analyzed. Secondly, associated with the actual situation of our country, the thesis analyses the possibility and necessity o...