Finance and Credit

Studying the value drivers of banking business

Vol. 24, Iss. 5, MAY 2018

Received: 10 April 2018

Received in revised form: 24 April 2018

Accepted: 8 May 2018

Available online: 29 May 2018

Subject Heading: Banking

JEL Classification: G21

Pages: 1109-1128

Frolova V.B. Financial University under Government of Russian Federation, Moscow, Russian Federation

Khan' T.F. Financial University under Government of Russian Federation, Moscow, Russian Federation

Importance The article considers a set of methodological and practical aspects to assess the banking business.
Objectives The aim is to review financial performance of Russian and foreign banks to identify factors that shape the value of banking business.
Methods The study rests on systems approach, method of comparison with the use of elements of graphical, factor and correlation, and regression analysis.
Results The paper analyzes the largest banks of Russia, Europe and Asia. We highlight the key factors of bank's value. The study proposes a regression model, reflecting the peculiarities of the factors' impact on the value of credit institutions.
Conclusions and Relevance The value drivers of credit institutions include a strong position in capital adequacy compliance requirements of the Central Bank of the Russian Federation, ability to attract funds at a reasonable cost, a reasonable balance between loan portfolio's margin and risks, effective cost management. To maximize the bank's value, it is important to determine the components and specific features of banking business that affect its worth. The introduction of value-based approach to Bank management can ensure sustainable functioning of credit institutions.

Keywords: factor, value, cost of funds, net interest margin, capital adequacy


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