Abstract
We investigate whether central bank digital currency (CBDC) affects corporate financing costs. Results from Difference-in-difference (DID) estimation indicate that corporate debt financing costs rise significantly in the presence of China's central bank digital currency (CBDC). Our mechanism analyses suggest that CBDC boosts financing costs through credit channel, specifically by specifically by increasing bank lending rates, reducing the scale of credit, and heightening the challenges associated with securing debt financing. This study offers critical insights for policymakers, shedding light on the consequences of CBDC issuance.
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