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An Evaluation of Financial Performance of Private Commercial Banks in Syria Using Economic Value Added (EVA)

Classification: Master Thesis (Dissertation)
Author: Ahlam fahed dakak
Title: An Evaluation of Financial Performance of Private Commercial Banks in Syria Using Economic Value Added (EVA)
Supervisor: Dr. Othman Naqar                  Dr. Asmhan Khalaf
Faculty: Faculty of Economics
Department: Finance and Banking
Year: 2017

 

Abstract

This study aims to analyze the relation between the Economic Value Added Model (EVA) as developed form of the residual profit concept, which is considered a modern economic performance indicator, and the traditional financial performance indicators, such as Return on Investment (ROI), Return on Equity (ROE), Earning-Price Ratio (E/P), on one hand, and the market value of the prices of shares of the banks studied, which are registered at Damascus Stock Exchange, on the other hand. The results of the analysis will be used to see which is more efficient in explaining changes in the market value of shares. To achieve this, a cross-sectional analysis [Panel Regression Model (PRM)] was used to test the effect of indicators on the share market prices of the selected banks listed on Damascus Stock Exchange in the period from 2010 to 2015. One of the most important results of this study is that the Economic Value Added Model cannot explain the changes in the market value of shares. On the other hand, the Return on Equity (ROI) rate proves to be more efficient than  the rest of the indicators in the interpretation of these changes. As for the traditional financial performance indicators, they were used together to measure the changes in the market value of shares and the proved to be better. Therefore, the most important recommendation of this study is the necessity to rely on traditional financial indicators in combination evaluating financial performance and not consider these indicators in light of the tendency towards modern economic indicators. The study also recommends that more case studies should be conducted to reveal the effectiveness of the Economic Value Added Model in longer periods and in normal, stable conditions. Finally, taking  the study recommends the accounting approach of this model in consideration, which is reflected more accurately on the shareholders’ net profit.

 

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