Research Of Evaluation Method For The Performance Of China's Commercial Banks

In recent years, along with continuous deepening of China's financial system reform and changing of market competitive environment, the central bank and commercial banks have undergone a series of adjustment and reform, and the performance status after such adjustment and reform arouses most of our concerns. So to conceive a performance analysis framework and an evaluation indexes system of commercial banks and on this basis to evaluate the performance of commercial banks will bring positive influence to the acquiring of performance status of commercial banks, analyzing the effective elements for improving performance and furthermore, working out more effective supervising policies. In order to assess and evluate the managing status of commercial banks, scientific methods have been formulated in many countries such as the CAEL method of Federal Deposit Insurance Company (FDIC), the CAMEL system of the Office of the Comptroller of the Currency (OCC), Financial Strength Assessing Method of Moody's Investors Service and Bank's Assessing Method of Standard & Poor, etc. Research Fellows in our country such as Mr. Li Jianjun and Mr. Zou Jianping, etc., have designed a set of evaluation index systems suitable for commercial banks based on the situation of our country. In February of 2004, for the purpose of strengthening financial supervision, the Supervision And Management Committee Of Banking Industry Of China has promulgated 'Risk Assessing System of Share-holding Commercial Banks' to examine quantitatively of the risk status and inner risk control ability of commercial banks.The article sets its base on criterion and demonstration study and carried out a relatively overall and systematic research on the managing status of commercialbanks from the 6 aspects of asset quality, capital adequacy, earning, liquidity, expanding ability and managing ability and their interrelation. By applying analytical hierarchy process (AHP).method the article sets up an assessing model of 15 quantitative indexes and 6 qualitative indexes and illustrates in the above mentioned 6 aspects with relevant datas the performance evaluation of the existing 5 public listed commercial bank in our country.The article comprises 4 parts: The first part introduction illustrates the aim and meaning of the subject, gives a common sense of the primary research method worldwide and the Basle Agreement and points out the inadequacy of present evaluation method of commercial banks in our country. Thd second part analyses the present status and facing problems of commercial banks in our country. The third part construes particularly the 6 aspects which influence the evaluation of the performance of commercial banks, i.e., assets quality, capital adequacy, earning, liquidity, expanding ability and managing ability, and on this basis formulates the performance evaluation indexes system for commercial banks in this country. The fourth part builds a managing performance synthesis evaluation model by applying AHP method and goes through an evaluation to the performance of the year 2003 of the present public listed commercial banks in the country.The innovation of the article:1. Clear object of evaluation. The article hosts from the angle of depositors and social credit assessing institutions, aims at the willingness and ability to fulfill financial liabilities of commercial banks, emphasize on the managing stability of commercial banks, sets priority to assets quality and liquidating ability in consideration of index design, thus to reflect the concerns of depositor and credit assessing institutions about the assets security and risk control of commercial banks.2. On the basis of theory study, setting up a brand-new performance evaluation model of commercial banks by AHP, which is a fair guidance to theory and practice.