Using a sample of publicly listed banks from 62 developed and developing, including MENA, countries over the 1991-2017 period, we investigate the impact of capital on banks’ cost of equity. We report the highest median cost of equity in Lebanon with 25.1%.
ABSTRACT:
Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalised banks enjoy lower equity costs.
Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalised banks enjoy lower equity costs.
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