The Study On Value Creation Ability Of Chinese Commercial Banks Based On EVA

With the rapid development of the financial industry, many commercial banks accelerate their pace to initial public offerings, so the performance and investment value of the banks becomes a focal point. Because of the profound lessons of the financial crisis, the development and reform of commercial banks has been universally concerned. To assess the value creation ability of the banks, the paper adopted EVA method which is highly recommended in the theory field to measure the value of the commercial banks. The introduction of EVA concept and technology has very important practical significance for precisely assessing the value of the bank, building a scientific management system, and responding to the challenges of financial opening up.EVA is not only considered the debt capital, but also the equity capital which makes assessment precisely reflect the value added. In fact, EVA is the capital efficiency indicator, and it also reflects the operational efficiency which is based on the management of capital and risk. EVA is widely adopted in many European banks, and the management systems are established based on the EVA index.First, this paper reviews the researches which concern about the EVA effectiveness and value creations. And then have a deep study on EVA theory which includes origin, development, calculation and adjustments of the EVA. Moreover, the EVA index and value creation have been combined, and the result shows EVA has advantages in assessing the ability of value creation. The paper select 11 listed commercial banks in the time of 2004 to 2010 as the samples, then according to the factors which affect the value creation, I established multiple regression models to make empirical analysis. Ultimately, get the method to enhance the ability of value creation. The empirical result shows:the prime operating revenue index, the sum of top 5 tradable shares index and the salary of senior executive index are very important to enhance the EVA. But the debt-to-asset ratio, net profit increasing rate and the number of directors do not affect the EVA obviously. Finally, according to the empirical results, some suggestions have been given to raise the value creation ability of the banks. And the suggestions are mainly about the optimization of the banking market structure and the internal governance structure of commercial banks.