Valuation Method Of China’s Commercial Banks Based On The Goodwill And Net Asset Model

Since the financial industry was opened to foreign investors at the end of2006, domestic commercial banks have faced more challenges. Now we are speeding up and deepening financial reform. Then the issues about restructuring financial system, the reforming and listing of state-owned commercial banks, foreign investor’s entering the bank, etc. will increase a lot. And bank evaluation is just the base of these capital activities. However, bank is a special industry and there is less research on it at present. Therefore, how to choose a proper bank evaluation method is an important problem crying out for solution.But, there have not formed a wide range of valuation concepts in our country, only when mergers and acquisitions occurred, the bank began to assess the valuation, but bank is a special industry and there is less research on it at present. Under normal circumstances, the bank in our country use the Replacement cost method to assess valuation,because our capital markets not yet mature, so the method such as Market comparison approach and Cash flow method is not suitable for our commercial banks.So, Effective valuation method not only reduces the uncertainty in the capital activities but also improve the efficiency of bank capital activities. With more and more banks began to publicly traded in the market, the valuation of the bank are concerned by more and more people, so,under the circumstances that the traditional valuation methods are not suit for the bank, It is necessary to find a mode to assess the valuation of the commercial bank of our country.In this paper, we analysis of commercial bank valuation difficulties on the basis of analyzing the characteristics of the commercial banks. Then, This article follows the line of thinking, the value of commercial banks include goodwill and Net asset, So, the paper construct the Goodwill and Net asset mode to assess the valuation of the bank in China, and Combined with actual cases to Verify the validity of the model.In this thesis, there are four parts:The first part, we first review and comment Traditional valuation methods of enterprise, however, the traditional valuation methods are not very suitable to commercial banks.The second part, to find out the proper method we need to know the value characteristics of commercial banks. So, this part primarily analysis of the Value constitutes characteristic of commercial banks in our country.The third part, after analyzing the enterprise nature, the position in the social economy and operation mechanism of commercial banks, the paper draws out the value components, which conclude bank credit, custom resources, system resources and bank net asset. The method is called goodwill and net asset valuation method. Next, we explain the theoretical framework of commercial bank valuation. The paper first analyses the company characteristics and operation mechanism of commercial banks by using system economics, then the method of Goodwill and Net asset has been naturally introduced.The fourth part, On the basis of the financial analysis of the Bank of Communications and Consider the impact of the financial crisis on the value of the Bank of Communications, Then, Use the mode to analysis of the value of the Bank of Communications.The result shows that bank share value is correlated positively with net asset, the load and deposit balance, rate of return on common stockholder’s equity, and the operating time.With the improvement of Chinese capital market, more and more banks will go public, and more data can be employed in the model, therefore the research in this area could be much improved and much useful in the future.