Study On Application Of EVA In The Performance Evaluation Of Chinese Commercial Bank

Since entering the 21st century, Chinese commercial banks experienced a tremendous and profound reform, initially completing the change of organizational system and the expansion of assets. However, on one hand, both management mechanisms and development ways haven't been fundamentally transformed, on the other hand, Coordinated and healthy development on the unified based of the scale, speed, quality, and efficiency haven't been achieved. Compared with foreign advanced banks, Chinese commercial banks still have a gap, and face operational inefficiencies, high non-performing assets, etc. Therefore, one of the problems that need urgently resolved currently for Chinese commercial banks, is to meet the challenges the banking industry's fully opening up has brought, become bigger and stronger on the basis of effectively controlling operation risks and continuously optimizing the quality of assets, truly become the commercial banks equipped with the world's advanced managements and international competitiveness, and establish a scientific and effective performance evaluation mechanism.This paper proposes to build an Economic Value Added (EVA) performance evaluation system. Compared to the traditional performance evaluations, EVA fully considers the cost of equity capital of commercial banks, which is also the risk-adjusted cost. According to tell the level of the future profitability and risks of banks the capital market forecasts, the cost of equity capital can effectively measure the expected net income of invested capital. significance, recollects and reviews some related theories, and describes the research methods used in this paper, and innovative points.This paper is based on the EVA theories, elaborates traditional formulas for calculating EVA index and matter of accounting adjustments, obtains a conclusion of its advantages through the comparison between EVA and traditional evaluation indicators; analyses the EVA application in the performance evaluation of domestic and foreign commercial banks ,and points the problems of EVA performance evaluation in Chinese commercial banks; construction of the performance evaluation framework and incentives for commercial banks, based on EVA, and elaborately analyzes its calculation and distribution, meanwhile pointing out the advantages; select Merchants Bank, Industrial Bank, Shanghai Pudong Development Bank and Huaxia Bank as samples, in accordance with its 2009 annual report data to analysis EVA performance evaluation, through the calculation of EVA and REVA to analyse samples'operating conditions, compares samples'EVA and REVA with traditional financial indicators (NI, ROE, EPS) meanwhile time, proves EVA relative superiority of the traditional performance evaluation from the data once again; finally, on the based of theoretical and empirical analysis, proposes the suggests that make better the EVA performance evaluation in Chinese commercial banks, hoping to help improve Chinese commercial banks business performance.