IDEAS home Printed from https://ideas.repec.org/a/epw/ejbmr0/v8y2023i2id51888.html

Assessing the Relationship between Enhanced Capital Requirements and Banks' Cost of Equity: Evidence from Publicly Listed Banks in Bangladesh

Author

Listed:
  • Md. Shah Naoaj

    (New York University, USA)

  • Mir Md. Moyazzem Hosen

    (University of California Los Angeles (UCLA), USA)

Abstract

This paper examines the relationship between the cost of equity and the level of capital maintenance for banks in Bangladesh. Using data from publicly listed scheduled commercial banks, the study finds a significant negative empirical relationship between the cost of equity and banks' capital maintenance level. Specifically, higher levels of equity lead to a reduced cost of equity, with a 10-percentage point increase in capital resulting in a 4.39 percentage point reduction. The study also finds that the quality of capital, particularly Tier 1 capital, heavily impacts the relationship between the two variables. Other control variables, such as profitability, liquidity, and non-performing loans, also impact the cost of equity. Overall, the study provides empirical evidence for the benefits of enhancing capital maintenance and improving the quality of capital to strengthen bank sustainability and financial sector stability in Bangladesh.

Suggested Citation

  • Md. Shah Naoaj & Mir Md. Moyazzem Hosen, 2023. "Assessing the Relationship between Enhanced Capital Requirements and Banks' Cost of Equity: Evidence from Publicly Listed Banks in Bangladesh," European Journal of Business and Management Research, European Open Science, vol. 8(2), pages 149-153, March.
    • Handle: RePEc:epw:ejbmr0:v:8:y:2023:i:2:id:51888
    DOI: 10.24018/ejbmr.2023.8.2.1888
    as

    Download full text from publisher

    File URL: https://eu-opensci.org/index.php/ejbmr/article/view/51888
    File Function: Abstract page
    Download Restriction: no
    File URL: https://eu-opensci.org/index.php/ejbmr/article/download/51888/7688
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.24018/ejbmr.2023.8.2.1888?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:epw:ejbmr0:v:8:y:2023:i:2:id:51888. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Support Team (email available below). General contact details of provider: https://eu-opensci.org/index.php/ejbmr .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.