Intermediary Business Cost Management Study Of Commercial Banks Based On Activity-Based Costing

Chinese commercial banks have been carrying out the loose operation and management. With the development of reform and opening up, both the management of commercial banks and the intermediary business have made great progress. However, Chinese commercial banks are much behind the foreign banks in terms of the intermediary business cost management. After the entry to the World Trade Organization, the commercial banks have been facing the more severe competitions. To count the product cost of intermediary business accurately and to control it effectively becomes a pressing problem. According to principle of product consumes activities and activities consume resource, Activity-Based costing (ABC) adopts many distribution standards to put indirect expense into the product cost so as to make the product cost more accurately. ABC is applicable in industries with various products, high indirect expense and high level of computing. Intermediary business has these features.The thesis is divided into five parts. The first chapter includes the research background, current research, research significance and the frame of research. Fundamental theory introduction about cost management and ABC is given in chapter two. In chapter three, I analyze the feasibility of applying ABC in intermediary business cost management. It concludes that ABC is applicable for intermediary business. Cost count and cost control are the most important parts in cost management. In chapter four, I analyze the activities and cost drivers of intermediary business. Taking some bank as example, I divide intermediary business activities into seven activities and 24 activities. This is the innovation of this thesis. In chapter five, we have studied the cost control of intermediary business with standard cost system. We think the discrepancy of activity cost is the most important part of cost control of intermediary business. After analyzing the discrepancy of activity cost, managers of commercial banks can find out the cause of cost discrepancy and take effective measures to control cost.