On Use Of EVA In China's Commercial Banks

In recent years, economic value-added (EVA) as one performance appraisal tool, has been widely concerned by the scholar and business circles, its application in enterprises is more and more extensive. As the remaining sum of net profit deduct capital cost, EVA become key achievement index for shareholder to appraise administrator. Compared with traditional accounting profit, EVA has not only considered the cost of the debt capital, but also considered the cost of the capital of rights and interests, therefore can reflect the business performance of enterprises truly.With the fast development of capital market,company's administration structure is complete day by day, and the deep understanding to the rare question of the capital, regarding maximum of enterprise value as the final goal of management and administration already becomes the common understanding of shareholder, administrator and operator. So, It has been a important goal of each Participant in the market to explore one set of effective performance appraisal system. As a index to Measure performance of commercial banks , EVA is effective to remedy the insufficient of traditional financial index in the the respect of the achievement, becomes a scientific performance appraisal system.This text proceeds with origin of EVA, has explained the main content of EVA theory, and analyzes to EVA application mode in general enterprise. Afte EVA tool was introduced,the banks calculate the capital cost with the economic capital and construct EVA model which accords with the characteristic of the bank.At present, already a lot of advanced commercial banks have used EVA theory and management mode widely. They have set up complicated management information system, carrie on accurate calculation to EVA of branch, products, customer and the whole bank; Some domestic banks such as China Construction Bank has introduced EVA index since 2002, accumulated experience in appraising the performance and setting up incentive system.As the financial market of our country opens gradually, in the face of the fierce market competition and severe challenge, the commercial bank of our country must improve the internal operating mechanism, appraise oneself accurately, improve the whole competitiveness constantly. EVA has offered theory and method that can be drawn lessons from to us. On the basis of using foreign and domestic EVA experience for reference, this thesis construct EVA management system that matched our commercial banks' reality.This thesis has emphasizd the necessity of the introduce of EVA in our country; improved the calculate Formula of EVA, confirmed the reconciliation item of the accounting profit, and calculated the capital cost with the economic capital. The thesis has designed EVA performance appraisal model and incentive system based on the bank's level, department and products; It analyzed the possible questions that may be produced from EVA, and put forward the corresponding solution. In order to promote the operation of EVA with more high-efficient system, the thesis has also proposed the suggestion of accelerating the construction of the management information system etc.Generally speaking, our commercial banks should introduce EVA as manage tools actively, set up the performance appraisal systems and incentive mechanism based on EVA, realize personal value together with enterprise value, promote the key competitiveness of our banks constantly, promote the sustainable development of our commercial banks , realize the maximization of shareholder's wealth and the bank value.