Activity-based Costing Research In The Application Of China's Commercial Banks

The banking industry in China has been opened to foreign financial institutions since the entrance of WTO. Facing the fierce competition, the banking professionals have already focused on the issue that how to make the Chinese commercial banks more competitive. They have also realized that cost management is a key aspect of bank operating management and it is very important to establish a new costing system in order to improve the banks'performance. However, the present costing system in Chinese banks is far from enough to provide the accurate product (or service) cost information. As an advanced costing method, Activity Based Costing (short for"ABC") has been adopted by many large banks and financial institutions abroad and proved to be effective in operating management and strategic decision making. This paper starts with the theoretical essence of ABC and the current situation of costing management in Chinese banks, and then it raises the methodology of applying ABC by analyzing a simulated case.Finally this paper elaborates several issues that should be noticed during the application. All the study is based on managerial, economic and accounting knowledge.