An Empirical Research On New Financial Instruments Standard's Influence On Expected Market Performance Of Public Banks

Public commercial banks, as the most dynamic part of China's banking industry, their social development are a focus of public attention. February 15, 2006, the Ministry of Finance issued "Enterprise Accounting Standard (2006)", and requested the listed companies to implement and encouraged the implementation of other enterprises since January 1, 2007. "Enterprise Accounting Standards No. 22—Financial Instruments Recognition and Measurement" regulates that derivative financial instruments should be included in sheet and measured with fair value. Then what kind of the impact will be about the implementation of this new financial instrument accounting standards for public banks?Following the introduction of the new standards, the impact about new standards to commercial banks became the focus of scholars' attention. Many scholars are expecting that derivative financial instruments to be included in sheet with fair value would lead to more instability of commercial banks' performance and assets. But scholars just have done expectation in language, and have not done empirical research. This paper attempts to do empirical research about this topic. Based on the adjustment of the public banks' historical data according to new financial instrument accounting standards, we can get new net profit and total assets which are the same with new financial instrument accounting standards, and then makes comparison between new data and historical data about the net profits and total assets. We use the method of paired-sample test and ANOVN and the result shows that new total assets become wavier and the average of total assets do not change markedly; new net profits do not become wavier and the average do not change markedly. Therefore we anticipate that total assets of public banks will become wavier after implementing the new financial instrument standard and the new standard will not be able to change the average of total assets, volatility and average of net profits markedly. And we forecast that if public banks are using this accounting method, the impact on public banks' performance and total assets will be greater and greater. And at the last of this paper we make some reasonable suggestions to public banks.