Economic Value Added _Formated_.pdf

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Jahur & Riyadh:Economic Value Added as a Management Tool 55 Table: 1 Ranking of the Select Banks Based on EVA and others Performance Measures Ranking EVA Net Profit ROA Interest Income Deposit Per Employee Profit Per Employee Rank-1 G B UBL SBI SB CITI HANVIT Rank-2 UBL GB HANVIT JB GB GB Rank-3 SCB SCB SHAMIL RB AMEX CITI Rank-4 PUBALI PUBALI CAI AGRANI SCB SCB Rank-5 NBL NBL PRIME BKB MBL SBI Rank-6 UCBL PRIME UBL PUBALI DUTCH AMEX Rank-7 DUTCH EBL GB SCB DBL SHAMIL Rank-8 NCCBL BSB EBL GB HANVIT EBL Rank-9 CITY SB CITI IBBL SIBL MBL Rank-10 SOUTH JB BASIC UBL EBL DUTCH GB- Grindlays Bank NBL-National Bank Limited RB-Rupali Bank JB-Janata Bank AGRANI-Agrani Bank BKB- Bangladesh Krishi Bank SCB- Standard Chartered Bank SB-Sonali Bank IBBL-Islami Bank Bangladesh Limited PUBALI-Pubali Bank AMEX-American Express Bank CITY- The City Bank Ltd. CAI-Credit Agricole Indosuez MBL-Mercantile Bank Ltd. SHAMIL- ShamilIslamic Bank of Bahrain EBL-Eastern Bank Limited UBL- Uttara Bank Ltd. SBI-State Bank of India BASIC-Bank of Small Industies and Cottage DUTCH-Dutch Bangla Bank Ltd. HANVIT- Hanvit Bank DBL-Dhaka Bank Limited SIBL- Social Investment Bank CITI- Citi Bank NA A perusal of Table 1 has revealed that performance of selected banks in respect of ranking differ from measure to measure. Table -1 shows that based on EVA, Grindlays Bank, Uttara Bank Limited, and Standard Chartered Bank have ranked first, second and third, respectively. Other banks Pubali Bank Ltd., National bank Ltd., UCBL, Dutch Bangla Bank Ltd., NCCBL, The City Bank Ltd., and the Southeast Bank Ltd. have ranked from 4 th to 10 th in order of magnitudes. A perusal of ranking of the selected banking companies under ROA indicates that State Bank of India, Hanvit Bank and Shamil Islamic Bank have ranked 1 st , 2nd and 3 rd respectively. These banks are followed by the banks Credit Agri Cole Indosuez, Prime Bank Ltd., Uttara Bank Ltd., Grindlays Bank, Eastern Bank Ltd., Citi Bank N.A., and BASIC in order of magnitudes. It has also been observed from the Table-1 that ranking of the selected banks under other performance measures such as “Interest Income”, “Spread”, “Net Profit”, and “Profit Per Employee” and “Deposit Per Employee” give different rankings as compared to EVA. Although some banks such as Grindlays Bank, Standard Chartered Bank, have been found within top 10 ranking under almost all
56 Bank Parikrama performance measures. It implies that these commercial banks have been performing well in all perspectives. Considering the rankings of the selected banks under different performance measures, EVA has been found to be inconsistent with other parameters of measuring performance. The difference in rankings of the selected banks between EVA and other performance measures has led the researchers to note that EVA is independent of other measures to a higher extent. To put it differently, EVA can be a better tool for measuring managerial performance of the selected banks. 12. EVA with Other Parameters As we know, EVA is a solid measure to determine the efficiency and efficacy of agencies how they perform in managing organization by generating value over and above the cost of capital for the principal. To study this, EVA of the selected banking sector has been compared with other parameters used for judging the performance of Banks. It has been observed in the above section that EVA is different from other measures of performance such as ROA, Interest Income, Spread, Net Profit, Profit Per Employee, and Deposit Per Employee considering the rankings of the select banks. Because the ranking results of the selected banks under EVA are found independent of other aforesaid measures to a higher extent. The present section of the study has examined whether EVA is independent of other measures of performance significantly or not with the help of rank correlation coefficients. Appendix -4 shows the rank correlation coefficients between EVA and other measures of performance. A perusal of the Appendix -4 indicates that rank correlation coefficients between “EVA and ROA”, “EVA and Net Profit”, and “EVA and Profit Per Employee” are found statistically insignificant at 1% level and “EVA and Deposit Per Employee” at 5% level because rank correlation coefficient lies outside the acceptance region. These statistical results have led the researcher to reject the null hypothesis (Ho) that there is no significant correlation between “EVA and ROA”, “EVA and Profit Per Employee” and “EVA and Deposit Per Employee”. It implies that EVA has statistically significant relationship with other parameters of performance measures such as
Page 1 and 2: Bank Posikrama Volume XXVII,No.1, M
Page 3 and 4: 48 Bank Parikrama superiority of a
Page 5 and 6: 50 Bank Parikrama Where, ROI = Retu
Page 7 and 8: 52 Bank Parikrama bank earned throu
Page 9: 54 Bank Parikrama Ranking of all ab
Page 13 and 14: 58 Bank Parikrama REFERENCES Anthon
Page 15 and 16: 60 Bank Parikrama Appendix 2 Banks
Page 17 and 18: 62 Bank Parikrama Appendix 3 (Contd

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