Research On Competitiveness Evaluation System Of China's Commercial Banks

The financial transaction has opened all-sided after China joined the WTO. Chinese banks are engaged in the fierce competition with the experienced foreign banks that are still accelerating their entrance into the market. How to survive and develop them is an extreme important topic when the financial institutes around the globe suffered from the subprime Mortgage CrisisThe existing study simply focuses on comparison of liquidity, capital adequacy, asset quality and profitability and neglects some necessary indicators, especially the risk indicators. The financial crisis bring out huge impact on world economy ,some giant in banking industry suffer from the huge lost, let along the investment banks on Wall street. Under the current circumstance, the further study on this topic is crucial.Starting with the quantitative indicators like liquidity, profitability and security, this paper establishes a evaluation model for commercial bank based on factor analysis method, using commercial banks at home and abroad as major target for research. Combined with some qualitative indicators including management, human resource and IT system, and then prove the effectiveness and feasibility of the model with empirical data. Hopefully this paper could help those scholars interested in further study in this area. Following are the main contents of this paper. Firstly, this paper analyzes the pros and cons of existing competitiveness evaluation system. Meanwhile some basic background theoretic knowledge is also introduced.Secondly, this paper introduces the VaR indicator as a security indicator into the model and emphasizes the importance of security. To improve the accuracy of VaR, 5 HK listed Chinese commercial banks are selected as samples.Thirdly, the evaluation model for commercial banks is established combining quantitative financial indicators with qualitative indictors such as human resource. Since some competitiveness factors are hard to get or quantitated, the introduction of qualitative indicators crucial and draw more attention to these factorsFourthly, hand out questionnaire to the banks and ask managers and employees to rate the importance of the qualitative indicators and the performance of all the banks. This paper analyzes and researches the factors regarding the competitiveness of commercial banks and then establishes a new framework based on theoretic knowledge and mathematics modeling tools. Meanwhile, the validity and accuracy has been checked by real business data. It not only provides theoretic reference for the banks to enhance their own competence but also expands the research on bank competitiveness.