MODELING THE SOURCES OF VALUE IN BANKS AND VALUATION THROUGH THE DISCOUNTED CASH FLOW METHOD

Elena Ralinska
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Elena Ralinska: UNWE

Economic Archive, 2019, issue 1 Year 2019, 33-51

Abstract: We propose an upgrade, adaptation and implementation of a factor model of historical financial analysis, forecasting and valuation of the banking institution through the method of discounted cash flows based on publicly accessible data, which can be applied in the practice. We research the adequacy and plausibility of the approach, its benefits and drawbacks, as we test it on Unicredit Bulbank Ltd, and we apply a comparative valuation approach and accounting reference values of control of the obtained results. The research objective is to upgrade and calibrate the model by introducing restrictive conditions for forecasting in compliance with the existing regulatory framework and the observations of the practice. For this purpose, we have also introduced a feasible parametrization and we have brought forth relevant recommendations for forecasting the activity of banking financial institutions.

Keywords: factor model; value of a bank; CAMP2; discounted cash flow model; shareholders’ net income (search for similar items in EconPapers)
JEL-codes: C31 C39 G21 (search for similar items in EconPapers)
Date: 2019
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