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Study Of The Impact Of Risk Management On Value Creation Ability Of China's Commercial Banks

Posted on:2009-04-14Degree:MasterType:Thesis
Country:ChinaCandidate:X D WangFull Text:PDF
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Banking is a business operating risks. As a business entity, it should make profit as well as creating value for the stock holders. Banks pay much attention to risk management, for banks have little assets of their own, most of the assets are lend from other businesses and public. We apply the EVA measurement in the paper to evaluate the commercial bank's value creation ability in China. EVA adjusts the risk factors when measuring bank value. It not only considers the cost of equity, but the cost of the debt, thus gives us a much clearer picture of the value of the enterprise, and it can maximize the shareholder value.The Basel Accord regulates very clearly the asset requirement of each kind of risk, such as the market risk, the credit risk, the operation risk and so on. The key of the risk management is risk capital management, and it influences the cost of the asset and thus the value of the banks. Risk, capital and market value are factors interacting with each other. This paper very clearly analyzes the relationship of risk management and the bank value. And it analyzes the risk factor of the commercial banks in China, and how it influences the value. This paper concludes that all in all, the risk and value has important relations, various risk factors have various effects on the value. It indicates the China's banks have some problems in terms of its risk management and corporate governance, thus China's banks should strengthen its total risk management, and in the same time, it also indicates that risk management is still important in the process of banks value creation.
Keywords/Search Tags:Risk management, Value creation, Economic capital allocation, EVA
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