Investment Value Analysis Of The State Commercial Bank

The stability of banking sector is the key to the development of thewhole financial market. Especially the state commercial bank, which is thepillar of national industry, contributes a lot for the banking industry inChina. With the development of the security market, more investors focuson banks for their adequate asset quality and increasing profits. Then whatinterests investors most must be how to evaluate the investment value ofthese companies. However, researches in this field are more concentratedon commercial banks, such as Pudong Development Bank, but not the statecommercial bank. In general, few studies on the later have involved indistinctions of the state commercial bank, which will decrease therationality of the studies.By way of literature review and case study, this study will analyze theinvestment value of the state commercial bank based on their unique traits.On that background, this study give a conclusion of the state commercialbank shall have a premium because of their features, such as the value ofthe privileges of state banks. With the application of real option growoption, the provision for impairment of the bank can be treated as theinvestment from investors to get the premium, the theoretical model for thepremium of Chinese state commercial banks can be established. Then docase study of the Agricultural Bank of China with matlab. Compare valuesinclude and exclude the premium with the performance of its stock price,and give a conclusion that the premium of the SOCB is valid, whichshould be in the total investment value. This paper is to refine relevant researches, and to provide investors with a more appropriate way toevaluate Chinese state commercial banks.