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Valuation of Banks in Bulgaria Using the DCF Method

Author

Listed:
  • 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)

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.

Suggested Citation

  • Zlatin Sarastov & Irina Kazandzhieva & Elena Ralinska, 2021. "Valuation of Banks in Bulgaria Using the DCF Method," Ikonomiceski i Sotsialni Alternativi, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 72-108, July.
    • Handle: RePEc:nwe:iisabg:y:2021:i:2:p:72-108
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