  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.
