Economic Value Added (EVA) And its Calculation Features in Banks

Abstract

As a financial organization each commercial bank in order to solve its tasks, must perform a number of operations that play a primary role not only in the bank's activities, but also in the development of the economy as a whole and its individual industries. The effectiveness of corporate governance and the use of resources directly affect the economic development of the country, providing a positive financial result. Therefore, the analysis of the bank's financial indicators is especially important for management to maintain the stability of the company and increase its market share (AL Osaimi, 2019). The passive operations of Ardshinbank CJSC, considering possible scenarios for their change, are analyzed in the given article. The goal is to identify what additional economic value the bank creates and how attractive it is from the investors’ point of view. Forecasts of EVA components for 2023 have been implemented in Excel, using the tools of Polynomial and Exponential Trend line. The impact of the given components on EVA have been considered, and the bonus plan system based on the EVA indicator for managers has been calculated, which will greatly stimulate the use of the EVA indicator in banks. A regression model has been performed to identify the mutual link between the EVA indicator and the Bonus plan. The latter can become quite an interesting tool for bank managers in management decision-making.