State-owned Commercial Banks, The Balanced Scorecard Application To Explore And Study

China's four State-owned commercial banks—the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank and the Agricultural Bank of China have been taking a share-holding reform currently. Government has required them to sort out their assets and restructure into "true commercial banks" within five years in order to compete in a market which will then be fully opened to foreign financial institutions. Therefore, China's State-owned commercial banks need to build up a sound performance measurement system to ease the formulation and implementation of strategies and to ensure a sustainable development. The weakness of previous management approaches is that they are mainly concerned with financial measures that tell the story of past events. Those measures are no longer adequate to evaluate commercial banks nowadays. So it is critical to look for an effective measurement system to move the reforms forward. Through fully analyzing the current situation of China's State-owned commercial banks, we propose that the Balanced Scorecard(BSC) should be adopted to measure the banks'performances. The BSC system requires us to observe the banks from four perspectives including financial perspective, customer perspective, business process perspective and learning and growth perspective. Comparing the actual values with the target values and analyzing the drivers behind the results, we redefine the target values, indicators and strategies thus every employee can be more aware of the bank's strategies and measures of success so that core competencies will be more readily cultivated. In this paper, we will discuss how balanced scorecards can be developed to measure China's state-owned commercial bank's performance . This paper is composed of three parts: the first part introduces the basics and advantages of BSC. The second part describes the evolvement...