EVA In The Performance Evaluation Of Commercial Banks

Effective performance evaluation is a key point in the controlling and stimulating system of commercial banks. It combines the manager's interest with bank performance, risk control and development strategy. EVA is an income, which deduct risk cost. It prefers to the holder's target. So it is better than other performance evaluation.The essay is based on EVA model. It puts forward EVA model of banks. It makes research on economic capital, which is the key point in EVA model of banks. By analyzing the using of EVA in Chinese commercial banks'performance evaluation, I want to make a conclusion, that it is effective to use EVA in commercial banks. EVA considers the capital cost of risk, and it adjusts the financial statement suitably. So it can encourage managers to pay more attention on risk control, to increase capital profit.There are four parts in the essay. Chapter one is about the history and concept of EVA. Chapter two analyzes economic capital in EVA model of banks. Chapter three explains how to use EVA in a case. Further it concludes the effects by EVA in management of banks. Chapter four evaluates the advantage and shortage of Bank EVA, and point out how to improve it.