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TABLE 4: DEMOGRAPHIC INFORMATION OF RESPONDENTS Demographic
Experience in valuing banks
1-5 years 6-10 years 10+ years
Not expert in valuing banks
Highest education
Professional qualification (CFA, CA or similar)
3 or 4 year degree Masters
Doctorate Yes No
Types of analysis undertaken
In the questionnaire the first question asked the respondents to indicate how often they performed an industry, macro-economic and bank specific analysis when valuing banks. In the questionnaire these three forms of analysis were defined as follows:
• Industry analysis: Analysing the banking industry and how banks compete against each other.
• Macro-economic analysis: The process of analysing the general state of the economy and its potential effects on banks.
• Bank-specific factor analysis: The analysis of the financial conditions and the operating results of the bank.
TABLE 5: TYPES OF ANALYSIS Industry analysis
Very often Often
Occasionally Seldom Never
58.82% 35.29% 5.88% 0.00% 0.00%
Macro-economic analysis
47.06% 47.06% 0.00% 5.88% 0.00%
Bank-specific factor analysis
70.59% 29.41% 0.00% 0.00% 0.00%
The results, summarised in Table 5, indicate that these analysts normally perform all three of these types of analysis before valuing banks. This would indicate that these types of analysis are seen as important in determining a fair value for a bank in emerging markets.
Discounted cash flow methods compared to multiple valuations
In the next section of the questionnaire various questions were asked on discounted cash flow methods and multiple valuations. The results of these questions are summarised in Table 6. The results show that most of the respondents felt that the discounted cash flow (DCF) method is the most popular valuation technique to use when valuing banks in emerging markets. Furthermore most respondents indicated that they use the DCF model as their primary valuation method. It also emerged that multiples are generally used as a secondary valuation method.
VALUING BANKS IN EMERGING MARKETS: A REVIEW OF THE LITERATURE AND SOME INITIAL FINDINGS 1022 No of responses