Study On The Valuation Method Of Incremental Value In Commercial Bank

The environment of global banking has been changed largely with financial deregulation since 1970s.Since 1990s, the main international banks have begun to build a value-based management system, it has been proved that the bank can obtain great potential development by its incremental value. Presently, with the further reform of Commercial Banks in China, the management about the value of bank has taken a very important part, and our National Commercial Banks pay more attention to build value-based management system, to suit cotemporary financial development level and direction, and it will have significant meanings."Finance is the vitals of economy". Finance is very much essential to economic development in any country in any history in any period. Banking is the oldest industry of the Finance industry, with the technology development, the function and status of bank was being suspected. However, bank still play an important role in the running of the economy, and it is the core of economic system. That is the best description for banking. Firstly, according to the value theory and valuation method of the enterprise, this thesis analyzes the meaning of value, the increment value of commercial bank, and the requirements of evaluating commercial bank, then acquire a valuation model of the existing value deriving from Feltham-Ohlson model. Thirdly, it evaluates the of commercial bank using real option theory as reference, and then design a model on the incremental value of commercial bank, eventually, it tries to apply an example to the model. In the practice of the model, the article explore tentative modification on the selection of parameter with considering the characteristics of the operating in commercial bank, in order to reflect the real incremental value more veritably. With the gradual improvement of commercial bank corporate governance, the maximum value has become the final goal of the commercial bank's operation and management. It must be pointed that building a value-based management system with the core of incremental value, is the only way to increase the value of commercial banks.