Study On Ability Of Value Creation Based On Economic Value Added In Listed Commercial Banks

As a finance organization of operating risk, the operation efficiency and forces for resisting risk are more concerned by modern banks. Based on concept of economic capital, EVA closely contacts bank capital with operation risk, and successfully interprets the value creation of commercial banks.First of all,the paper elaborate the relation between value creation and EVA, and then deduces the theory of EVA accounting for the performance of banks. After that, EVA of 14 samples of listed banks from 2007 to 2009 has measured by using applicable EVA model which is adjusted by means of accounting. The study result is that the state-holding banks created much more value than that of joint-stock banks, and the performance is not equal to that measured by traditional accounting index. It reflects that traditional evaluation index can not describe the performance of banks according to the fact from another perspective.Apart from that, paper analyze interior factors and exterior environmental factors that commercial banks are facing, in order to find out which factor can affect the ability of value creation. Again, there are 9 typical factors chosen as independent variables from commercial banks'7 levels, including creative ability, liquidity ratio, capital management, assets quality, assets management, corporate governance and cost control. The regression model is established by using REVA as a dependent variable, the analysis result of regression shows that the value creation of commercial banks are significantly affected by cost-income ratio, loan-deposit ratio, capital adequacy ratio, bad loan ratio and loan loss reserve ratio .According to abovementioned empirical result, the paper puts forward solutions to the question of how to improve ability of value creation for commercial banks. Firstly, the concept of EVA should be extended to not only managers but also employee. Secondly, shareholding reform should be continuously implemented, which is useful to optimize equity structure. Thirdly, the cost consciousness should be paid more attention to, which is necessary to optimize capital structure. Last but not least, expanding non-interest income is of benefit to increase income for commercial banks.