Study On Application Of EVA Of The State-Owned Commercial Banks

State-owned commercial banks occupy the dominant position of China's banking industry. On the one hand, with national policy support, the state-owned commercial banks have great advantages like the scale that other banks can not match and advantages in system, core business, operating regions, and so on.-On the other hand, compared to with successful foreign commercial banks and the international standards, state-owned commercial banks lack of competitiveness in many areas, like business philosophy, marketing, customers, products, personnel, information, and so on.From the year of 2004, Bank of China and China Construction Bank joint-stock system have reformed the joint -stock system. Until 2010, the Agricultural Bank of China has also gone public. Up to now, all of China's four state-owned commercial banks have reformed in joint-stock system.In an increasingly competitive environment, in order to meet challenges, seize opportunities, the management system to evaluate the performance is very important for long-term development. The management system based on economic value added (EVA) has golden opinion. The practice of commercial banks in western developed countries has proved that EVA is not only effective measure indicators of bank performance, but the basis for incentive mechanism to the bank manager and employee incentive mechanism.This paper refers to a large number of domestic and foreign research data. Drawing on the results of previous studies, the paper studies the theory of EVA and pays attention to the application of EVA in Agricultural Bank of China. The paper calculates the real value creation for shareholders and offers some specific recommendations combining the actual situation of the Agricultural Bank.In the normative study, this article summarizes the research status at home and abroad, studies and analyzes the EVA basic theory and method, compares EVA to traditional performance evaluation of the advantages, finds problems and solutions, and summarizes the trends and EVA derivatives. After appropriate adjustments, the paper determines the EVA formula, accounts adjustments, the calculation of the parameters, to suit the characteristics of the banking industry. According to the actual situation, the paper focuses on exploring the application of EVA in the state-owned commercial banks, how to build the management system with core of EVA in the state-owned commercial banks and compares the characteristics of Balanced Score Card, the ratio of Economic Value Added, benchmarking and other methods with EVA. According to shortcomings and limitations of EVA, the paper supplies some for EVA improvement. In the part of case study, at first, the paper summarizes the excellent experience of domestic and foreign commercial banks and the inspiration how to implement EVA system. Then, selects the Agricultural Bank of China as the research object, carries out the specific studies on the following aspects:first, the paper offers the detailed calculation methods and procedures for the EVA calculation of Agricultural Bank; second, the paper analyze the value of EVA for six consecutive years from 2004 to 2009, to find trends and changes in value creation; third, with specific performance evaluation indicators, incentive system, the paper explores how to improve the operating and management conditions of the Agricultural Bank and enhance the value that the Agricultural Bank of created for shareholders.