Does higher capital maintenance drive up banks cost of equity? Evidence from Bangladesh

Md Shah Naoaj and Mir Md Moyazzem Hosen

Abstract: This paper assesses whether the higher capital maintenance drives up banks cost of equity. We investigate the hypothesis using fixed effect panel estimation with the data from a sample of 28 publicly listed commercial banks over the 2013 to 2019 periods. We find a significant negative relationship between banks capital and cost of equity. Empirically our baseline estimates entail that a 10 percent increase in capital would reduce the cost of equity by 4.39 percent.

Date: 2023-01
New Economics Papers: this item is included in nep-ban
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