The Performance Evaluation Of Listed Commercial Banks In China Based On Grey Correlation Analysis

BACKGROUNDWith the deepening of China’s economic system reform, as well as the development of economic globalization, China’s banking sector has also undergone huge changes. The reform of the financial system, turns the state-owned banks into state-owned commercial banks, while the establishment of Minsheng Bank, Industrial Bank, Huaxia Bank and a number of joint-stock banks, and other144city commercial banks, builds a banking system of the multi-level includes commercial banks and joint-stock banks, also the city commercial banks, rural commercial banks andrural cooperative banks are included. Commercial banks gradually become a strong backing for the development of China’s real economy, plays an irreplaceable role in the response to the international financial crisis. Despite the impact of the European sovereign debt crisis, China’s commercial bank’s balance scale, profitability, capital adequacy ratio rose steadily in2011. This year Global bank ranking in7th "banker" published that, the world’s top ten include the Industrial and Commercial Bank of China, also China Construction Bank and Bank of China are on the list, at the same time more than100China’s banks in the list for the first time, Breaking the forecast of the editorial department of The Banker magazine that this number will be reached in2020.when the brilliant results achieved the commercial banks also facing serious challenges and fierce competition. Since2006, after joined the WTO, banks of other countrise have settled in China, compete with domestic banks. Be one of the world rankings, not equal to keeping pace with the world-famous banks. Compared with foreign banks, we have some weak points such as low efficiency, low capital adequacy ratio, profitability is not strong, weak anti-risk capability and a large proportion of non-performing loans. So, to win the competition we need to improvew the competitiveness first. This is not concern the commercial banks’ development only, but also plays an important role in the national economy steady. To enhance competitiveness, the first thing is to optimize the operating performance which is not only the core of competitiveness, but also has the ability to reflect and to prevent the banking crisis. So, this topic has a very profound significance in the study of operating performance evaluation method.PURPOSEThis paper has two missions one is to provide a scientific and applicable evaluation method for operating performance, makes evaluation results consistent with actual situation, and provide more objective information for stakeholders to fully understand the level of commercial banks operating and make reasonable decisions. Another one is assessing the listed commercial banks horizontally and vertically, identifying gaps, making up for the inadequacies, to achieve the optimal allocation of resources, enhance business competitiveness.MAIN CONTENT AND VIEWThis paper has five chapters as the following:As an introduction, chapter I mainly has four parts:the first is background; secondly, study the ideas and contents; researching methods are in the third section; At last is the main contribution insufficient. The main purpose of this chapter is to introduce the writing background and writing ideas, and pave the way for the below.Chapter Ⅱ is a literature review. Commercial Bank Business Performance Evaluation from domestic and foreign for Literature Review.Chapter Ⅲ is theoretical system of operating performance evaluation for commercial banks. The first section describes the relationship between principal-agent theory and stakeholder theory, also the enterprise value maximization theory. Secondly, according to the specific situation of operating performance measures, study the construction of China’s commercial banks index system. Finally, research the applicability of gray correlation analysis for the evaluation of China’s commercial banks. This chapter and chapter II is the theoretical basis of the full text, good theoretical preparation for Banking Business Performance Evaluation Based on Gray Relation in the later.Chapter IV is the main part of this article. Section I build a framework of indicators, according to indicators selected in the third chapter. In Section Ⅱ,16listed commercial banks are selected for samples, such as Bank of China and Bank of Ningbo Sample data from2009to2011as the time window mainly derived from annual report announced by the major commercial banks as well as China’s financial Yearbook. Section III is based on the raw data obtained using gray relational analysis to evaluate China’s16listed commercial banks operating performance, and come to the rank which is consistent with the literature description and the actual situation. Section IV, select some typical banks to carry out a detailed analysis from the horizontal and vertical according to the rank result of the previous section.Chapter V is policy recommendations and prospects section of this article. Give recommendations of China’s commercial banks, from two perspectives respectively. For state-owned commercial banks is focusing on how to optimize non-performing assets, improve development capacity and economies of scale. For joint-stock commercial banks, attention is paid on the further improving of safety and mobility, also the intermediate business income and competitiveness.CONTRIBUTIONSThis paper’s contributions are two aspects expressed as followed.First, there are many research results of gray relational analysis and commercial banks operating performance evaluation, but few results of the combination. So, this paper is trying to assess the operating performance of China’s commercial banks using gray relational analysis. Other comprehensive evaluation methods rely on large sample and the sample must obey certain probability distribution which is not easy to meet in reality, gray correlation method is a good solution to that problem.Second, integrating China’s actual situation, define and select a bank’s financial indicators. The selection of the sample data form2009to2011reflects the latest operating performance situation of China’s commercial banks.