Valuation in Banking: Issues and Models

Federico Beltrame and Daniele Previtali
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Federico Beltrame: University of Udine
Daniele Previtali: Luiss Guido Carli University

Chapter 2 in Valuing Banks, 2016, pp 7-40 from Palgrave Macmillan

Abstract: Abstract We discuss the problems in valuing banks affecting the application of the standard models of valuation used for industrial firms. In particular, we refer to the different roles of debt and capital, the regulatory framework, the provisioning effect and to the issues related to the cash flow measurement (net working capital and capital expenditure determination). In the second part of Chap. 2, we discuss the equity- and asset-side valuation metrics which academic literature and professionals consider the most suitable for banks. For each method, we highlight the main characteristics, the formalization and the advantages or disadvantages in their application.

Keywords: Cash Flow; Excess Return; International Financial Reporting Standard; Free Cash Flow; Capital Adequacy (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-1-137-56142-8_2

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DOI: 10.1057/978-1-137-56142-8_2

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