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The Study On Reconstruction Of Performance Evaluation Index System Of China’s State-owned Commercial Banks

Posted on:2015-02-19Degree:MasterType:Thesis
Country:ChinaCandidate:B Q LuoFull Text:PDF
GTID:2309330434952814Subject:Accounting
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In recent years, the banking industry is getting more attention from our society for its remarkably high profit. The banking industry in China has obtained rapid development and formed an extremely fierce competition situation after joining the World Trade Organization. On one hand, foreign banks have advanced management experience and technical strength in Chinese market, on the other hand, joint-stock banks, rural banks and city banks at home are also increasing in number and size. With the deepening of financial reform after the third Plenary Session of the18th Central Committee, China will further speed up the process of interest rate marketization. After the four big state-owned commercial banks have all been listed by July2010, the banking industry’s overall management level has been improved gradually; under the development of China’s capital market, the listed banks with revealed information are getting more attention from their shareholders. Changes in the industry are not only a development opportunity, but also a challenge for the state-owned commercial banks. How to develop business strategies much better and how to guide and promote the development of banking business through a scientific and effective performance evaluation index system has become a problem urgent to be solved in present.With the development of the global financial industry, the innovation of financial product, financial business and the structure of financial market become more complex, and the risks of financial market also tend to be diversified and concealed. After turmoil in the global financial crisis, the international banking industry has paid more attention to the financial risk control and supervision. In such a situation, a comprehensive risk management is not only the need of banks against regulation, but also their own premise condition for the healthy development of the banks. How to include comprehensive risk management into the performance evaluation index system to promote and perfect the construction of total risk management is the key point that the bank management should pay attention to.The purpose of this paper is to solve the problems faced by state-owned commercial banks via introducing a new performance evaluation method-----method of the economic value added (EVA). Using EVA to evaluate the performance of banks whose aims are to create wealth for shareholders under modern market environment can meet the scientific requirement of the bank performance evaluation. Through decomposition of EVA layer upon-layer, spreading this high generalization index to the various specific areas of the business, finding EVA drivers to evaluate specific operations of banks through single indexes and discovering the important contribution of risk management to banks’performance in this process so as to cause bank managers’attention to the comprehensive risk management for banks, it will be helpful for changing the management from passively coping with regulations to consciously dealing with management. This performance evaluation index system which combine comprehensive and single indexes closely makes up for past researches’focusing on the comprehensive evaluation method so much. So this evaluation system of state-owned commercial banks is more practical.This paper mainly includes five parts, and totally includes seven chapters:The first part is an introduction which demonstrates the background and meaning of the study, the research tracks and methods, and points out the contributions and deficiencies of the research in this paper.The second part includes two chapters’ content of literature review and theoretical basis. In reviewing the literature of the performance evaluation of commercial banks at home and abroad, this paper finds out research deficiencies of performance evaluation index system of China’s state-owned commercial banks and preliminarily establishes the direction of the research. And then it introduces related performance evaluation theory of commercial banks and three important methods of performance evaluation. All above has established a foundation for later research.The third part includes two chapters of analyzing the current situation of the performance evaluation system of state-owned commercial banks and the reconstruction of the index system. The fourth chapter collates and analyses the related regulations and current development situation of the four state-owned commercial banks’performance evaluation systems, finding out that there were two important problems:one is that it is not adaptable to the enterprises’ development requirements to evaluate the banks’ performance relying on traditional financial index; the other is that it is not enough to concentrate only on credit risk management but to ignore the other risks included in the comprehensive risk management. The fifth chapter chooses a reasonable method-----the economic added value (EVA) method according to the problems existing in the performance evaluation system of state-owned commercial banks. Given that the commercial bank is a special kind of financial enterprise, this paper decomposes the EVA from general to specific deductive induction, and finally builds up a performance evaluation index system which takes EVA and EVA Ratio as comprehensive indexes, including over ten specific indicators under profitability, risk management ability, solvency and development capacity.The fourth part is to analyze the business performance of the four state-owned commercial banks in2012, using the new performance evaluation index system to test the effectiveness of the new evaluation system in practice. It draws out the compared results of the four banks’operating performance and their respective development situations, and has a good effect on the improvement of bank operation and management.The fifth part is to illustrate the research conclusion and point out the limitations in the process of research and the direction of further research on the basis of summarizing the whole paper.The contributions of this paper are as follows:Firstly, it is the innovation of performance evaluation system method selection and specific application of this method in the banking industry. From the analysis of EVA evaluation system in general enterprises to its use in the banking industry by deductive reasoning, it makes up for the existing studies’deficiency of EVA uses in the banks’ management. The paper establishes a performance evaluation index system which takes EVA as a comprehensive index, including over ten specific indicators under profitability, risk management ability, solvency and development capacity. It is very practical for the banks’ management.Secondly, the new performance evaluation index system includes comprehensive risk management into it reasonably. Previous state-owned commercial banks’ comprehensive risk management evaluation is not perfect, not meeting the need of modern banking risk management construction. The paper demonstrates the relationship between the comprehensive risk management and EVA, so that the bank managers will fully understand the importance of risk management, and promote their enthusiasm of implementing comprehensive risk management. This is also very meaningful to maintain the safety of the banking and financial system in China.Limited to the attention of research, the dificiencies of this paper mainly include inadequate consideration of the non-financial evaluation indexes and inaccuracy of specific indicators’ measurement due to limited access to relevant data. While the research focuses on solving the main problems of performance evaluation index system of the state-owned commercial banks, it is insufficient limited to energy and it also provides space for the further research in the future.The author believes that along with the gradually perfect study, the practical application of the evaluation system will be better, and it can offer more help to the development of state-owned commercial banks in China.
Keywords/Search Tags:State-owned Commercial Banks, Performance Evaluation, Economic Value Added (EVA), Enterprise-wide Risk Management
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