A Proposal on the "I Bank Index," A measure of Bank's Ability to Nurture Client Businesses

Abstract

The main objective of this paper is to measure banks’ capability to nurture and develop client firms. Banks nowadays are required not only to act as providers of capital but also to provide consultation to and continuously support the restructuring and development of client firms through long-term business relationships. In this line of thought, it is natural to evaluate banks based on the degree to which they contribute to the growth and development of client firms. Banks can reaffirm the meaning of their existence by making improvements in their client firms’ performance over the long term. It is therefore desirable to align banks’ evaluating index with the aforementioned goal. The new index is defined as the difference between the average for a specific indicator of management among a bank’s client firms and the national average on the particular indicator. The new index will highly value banks that are able to improve the performance of client firms regarding the particular indicator.