Date of Award
Spring 2020
Degree Name
Bachelor of Science (BS)
Advisor(s)
Christakis Droussiotis
Abstract
The aim of this paper is to determine the most effective valuation approach for Southeast Asian banks that would produce the intrinsic value closest to the market price. Due to the unique financial nature and strict regulatory environment of Southeast Asian banks, investors experience difficulty in valuation estimates and investment decisions. Analysts are also prone to making arbitrary adjustments and calculations to their valuation models because no standard approach with sound underlying assumptions has been established. As per literature review, the valuation approaches used in this study are the Residual Income Model, Dividend Discount Model, and Price/Earnings and Price/Book ratios from the Relative Valuation Model. Data was gathered from a sample group of 32 banks from the Philippines, Malaysia, Thailand, and Indonesia. Linear regression analysis was used to compare market price with the intrinsic values derived from the valuation models mentioned. The results show that the residual income model yielded the highest adjusted R-Squared of 90.29% for the sample group of banks. This research proves that the residual income model should be the most effective valuation approach that investors and analysts use to more accurately forecast market price and help make better investment decisions for Southeast Asian banks.
Recommended Citation
Ong, Amos Timothy, "A Comparative Analysis of Bank Valuation Approaches in Southeast Asia" (2020). Gabelli School of Business Honors Thesis Collection. 73.
https://research.library.fordham.edu/gabelli_thesis/73
