Valuation of Banks in Bulgaria Using the DCF Method

Zlatin Sarastov, Irina Kazandzhieva and Elena Ralinska
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Zlatin Sarastov: University of National and World Economy, Sofia, Bulgaria
Irina Kazandzhieva: University of National and World Economy, Sofia, Bulgaria
Elena Ralinska: University of National and World Economy, Sofia, Bulgaria

Ikonomiceski i Sotsialni Alternativi, 2021, issue 2, 72-108

Abstract: The article presents a procedure for detailed deterministic modeling of bank valuation from the point of view of an outside observer, which is applied individually for First and Second Group banks in Bulgaria. The margin variables participating in the deterministic model, expressing the revenue and expenditure interest and non-interest margins, are combined in one generalized margin variable, and the volumes of balance sheets positions are represented by the value of bank-attracted resources. The results obtained from the application of the deterministic valuation model are compared with their book value, and for some of the smaller banks there are significant deviations between the valuation result and their book value.

Keywords: factor model; bank value; equity; net income; DCF valuation method (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:nwe:iisabg:y:2021:i:2:p:72-108

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