Analysis of the Value-Creating Ability of EVA-Based Investment Banks

The ultimate aim of investment banks is to optimize the allocation of capital and resources through capital market and create new value. Practices have shown that any economic activity is a process in pursuit of value creation and value-added, and so are investment banks. Economic value added (EVA), a new indicator set up by American Stern & Stewart in the 1980s to weigh value-creating ability, is now already applied by western financial circles to different degree. The empirical research of the value-creating ability of China´s investment banks by means of EVA has shown that the whole value-creating ability of China´s investment banks is still low. In the future, China´s investment banks should seek different value added channels in the five-level value-added chain.