چکیده:
Economic Value Added, or EVA is one of the popular tools that bankers can use to measure the financial performance of their bank. EVA helps management to conduct internal goal-setting. The long-term goal is preferred than short-term implications. It measures the company’s financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a cash basis. It helps to capture the real economic profit of a company. The main objective of this study is to examine the Iranian banks' financial performance based on EVA which is the modern concept introduced to evaluate the performance of banks. Data are collected for the study, which consisted annual reports of the banks from 2006 to 2017 (12 years). Private banks selected in this study were associated with increased non-performing loan to total loan, reduced capital adequacy, reduced profits and increased inefficiencies. All of these factors have led to reduction not only in the economic value of banks but also the negative EVA of selected banks. Banks are encouraged to identify unnecessary activities and reduce the cost of providing services to improve the economic value added of banks.
خلاصه ماشینی:
Economic Value Added, or EVA is one of the popular tools that bankers can use to measure the financial performance of their bank.
While some have developed different acronyms, in most cases the underlying measures are only slight modifications either of the return-on- capital idea underlying the basic RAROC or of the concept of the value-added over the cost of risk capital implied in EVA (Baer, Mehta, & Samandari, 2011, p.
Banks and other financial institutions have sought to base their capital allocation processes on shareholder value concepts such as Risk-Adjusted Return on Capital (RAROC) and Economic Value Added (EVA) in recent years.
Table 5 (View the image of this page) 4 Related Literature There are many research studies that support the positive reaction around using EVA technique (for example, O’Byrne, 1997; Lehn & Makhija, 1997; Zimmerman, 1997; Al-Jafari, 1997; Tully, 1998, 1999; Walbert, 1994; Biddle, Bowen, & Wallace, 1999; Prober, 2000; Machuga, Pfeiffer, & Verma, 2002; Torrez, Al-Jafari, & Juma'h, 2006).
At the same time, there are several studies that show different reaction (for example, DeVilliers & Auret, 1997; Wallace, 1997; Biddle, Bowen, & Wallace, 1997; Turvey, Lake, van Duren, & Sparling, 2000; Chen & Dodd, 2001; Fernandez, 2001; Haspeslagh, Noda, & Boulos, 2001; Bhattacharyya & Phani, 2004).
Fogelberg and Griffith (2000) argue that accounting performance measures for banks do not accurately assess shareholder value creation; instead, they only indicate average profitability.
Using Economic Value Added (EVA) to Measure and Improve Bank Performance.