Research On The Performance Evaluation Of Commercial Banks With Eva Method

As corporate governance of commercial banks is increasingly perfect, the maximization of enterprise value has become shareholders and regulators consensus. Nevertheless, how to scientifically evaluate the commercial banks operating performance is a difficult problem for enterprise stakeholders. Current core capital adequacy ratio, average net assets yield and net profit growth weighted index have been measuring the performance of commercial bank standard as the primary goal of its operation and incentive benchmarks. But with social and economic conditions change, these indicators increasingly were widely criticized. Because the common defects in these indicators is without complete consideration of the enterprise's rights. It is easy to cause the company cost of capital, increasing their risk and blind decision problems. In the new economic environment, the current accounting index has been increasingly useless. In order to improve the competitiveness of Chinese commercial banks, the enterprise must add new performance index and the means of financial management to the original performance evaluation system for better scientific assessing the businesses'value, and improving banks operating managers and owners interests inconsistent. It not only benefits commercial banks capital allocation performance appraisal, but also greatly promote the development and the value of the commercial banks in China. In 1982 Stern Stewart from a U.S. consulting firm first proposed the concept of Economic Value Added and its analysis and management methods. In recent years it has caused widespread concern from academia to practice caused widespread concern.Considering the cost of capital, EVA as an enterprise performance evaluation index can measure the production and operation of enterprises real earnings or value creation. Thus avoid overestimating profit growth rate of investment and corporate performance.EVA measures the company getting profit which is higher or lower than investors expected minimum payment. When EVA is positive, represents the means of company create value for shareholders and increase the wealth. When EVA is negative, investors'wealth are harm, the reduction of company capital assets is rather than creating wealth. If the EVA is zero, profits can only satisfy investors expected return, investors'wealth is neither increase nor damage.From the basic theories of EVA and performance evaluation, the thesis analyzes the existing problems of current performance evaluation methods, then introduces EVA can make up for the defects that the current performance evaluation does not attach importance to the cost of equity capital as a new corporate capital allocation, also demonstrates through empirical study. This thesis discusses the introduction of EVA performance evaluation of commercial banks. The thesis is divided into five parts as follows:The first part is introduction. Firstly expounds the background and the value of domestic and foreign commercial banks and performance evaluation of development evolution, draw beneficial enlightenment, and finally puts forward the ideas and methods.The second part is related to theoretical explanations.First of all, the performance evaluation and EVA theory are introduced, including the principal-agent theory and the theory of economic capital. Next, the thesis demonstrates the necessary connection between EVA and performance evaluation of capital allocation.The third part is an evaluation of the efficiency of EVA capital allocation. First, analyzes the problems of current evaluation index of capital allocation efficiency in commercial banks. And then introduces the advantages of the implementation of the EVA evaluation of capital allocation efficiency.Compared with the EVA index of 14 listed banks, the thesis selected Pudong Development Bank which has a highest index value as a analytical sample of the performance of the company's capital allocation. Also the thesis verified that EVA has an effect on improving the efficiency of capital allocation. In this section, through the analysis of existing index and EVA calculation the thesis shows the importance of EVA which pays attention to the cost of equity capitalThe fifth part first review, this text summarized the innovations and reflects the limitations.