Eva Theory And Its Application In Our Country's Commercial Banks

According to WTO commitments, China's commercial banks would enter the competitive environment with foreign counterparts after 2006. And enhance the core competitiveness is to improve the operating performance of China's commercial banks. After a series of restructuring, the overall operating performance of China's banks has increased, there was a marked change. However, whether the change is a true reflection of that in the performance of bank's value added is vital. This article aims to study the change of EVA in China's commercial banks, and then conducts empirical analysis about the driving factors of EVA in china's commercial banks.The situation of EVA in commercial banks in recent years can be seen after the EVA comes out, through which the business performance of banks can be reflected. Then, the paper tries to find out the deriving factors of EVA in China's banks through empirical analysis and how to increase the EVA. The paper selects Variables from asset size, asset quality, asset management, operational efficiency, degree of innovation and capital management which are factors inside of a bank. Although the external macro factors have a major impact on banks, they can't be controlled. This paper does not involve macroeconomic factors in the model. The results show that asset size, asset quality and capital management have more significant impact on EVA. Accordingly, the paper puts forward some suggestions in terms of improving EVA。EVA reflecting the economic value added of a company refers to the balance of net operating profit excluding the cost of capital for all investments (including debt capital costs and the cost of equity capital).It has been widely used in many companies in the developed countries. In China, it has been implemented by some large companies. After theory explanation and mathematical derivation, the paper calculates the EVA of 14 listed commercial banks between 2001—2008 according to the adjusted formula published in the journal of《Finance, Trade and Economic》by Gao li and Fan wei in 2003. The result shows that the EVA of China's banks have decreased a lot and needed to be improved after the capital cost is taking into account.