Analysis Of The Value-Creation Ability Of China's City Commercial Banks Based On EVA

At present, with the further reform in China, the management about the value of bank has taken a very important part. It has been proved that the bank can obtain great potential development by its added value. Then how can we measure the ability of value-creation of bank? Today, a new method generally applied in the world is economic value added (EVA), which provides idea and method to solve this problem.Compared to the traditional indicators such as profit, the largest feature of EVA approach is to consider the opportunity cost of equity capital, which can make up for the drawbacks of the traditional indicators that only take debt capital into account and ignore the equity capital cost. At the same time, through a series of accounting adjustments EVA eliminates the impact by the traditional accounting principles as far as possible, and reflects the true business performance more accurately, and makes shareholder wealth and corporate decision-making closely linked, demonstrating a new type of corporate values.First, according to the existing research and practice, this paper hackles EVA and its related theory. Second, on the basis of the analysis of China's city commercial banks' status and characteristics, this paper evaluates the value- creation ability of city commercial banks, and then made an empirical analysis on the factors of influencing the value-creation ability. The results shows that the value- creation ability of China's city commercial banks are poor, and the size of banks, corporate governance, market structure, financial innovation produce remarkable influence on the value-creation ability. Finally, this paper proposes some suggestion to enhance the value-creation ability of city commercial banks, and the author hopes to contribute to the development of China's city commercial banks.