Has CRMW lowered the cost of corporate debt? A structural credit risk model

Abstract This study examines the dual-edged role of digital finance (DF) and regional innovation (RI) in shaping corporate excess leverage (CEL) within China’s swiftly evolving economic landscape. Drawing on a comprehensive panel dataset of 1200 firm-year observations from Chinese listed firms (2011–2020). Combining theories of optimal capital structure, credit market dynamics and systemic risk, we employ fixed effects, two-stage least squares, system GMM and quantile regression techniques. The findings reveal a nuanced paradox: while digital finance significantly expands credit access, it simultaneously exacerbates corporate leverage, challenging the narrative that technological innovations invariably democratize financial markets. Moreover, regional innovation, contrary to Schumpeterian expectations, fails to independently mitigate leverage risk without robust institutional frameworks, exposing systemic vulnerabilities in debt-driven ecosystems. Notably, our analysis reveals significant heterogeneity across ownership structures: state-owned enterprises (SOEs) exploit regional innovation for policy-driven objectives and escalate leverage, whereas private firms (POEs) face heightened risks from unregulated DF due to agency costs and weaker safeguards. The study advances existing theoretical perspectives by (1) bridging the credit expansion and financial constraint framework; (2) refining the resource-based review, highlighting that state-backed resources distort innovation‒leverage dynamics, amplifying financial instability in SOEs; and (3) extending agency theory to the financial ecosystem, where regulatory asymmetries and information gaps intensify managerial risk-taking. Practically, we propose adaptive policies: AI-driven surveillance in innovation hubs for real-time risk mitigation and institutional capacity-building in underdeveloped regions to balance financial inclusion with stability.

This study examines the effect of financial ratios on dividend policy with sales growth as a moderating variable in technology sector companies listed on the Indonesia Stock Exchange during the period 2019–2023. Dividend policy is an important corporate decision because it reflects management considerations in balancing company growth and shareholder returns. The independent variables used in this research are profitability, liquidity, and leverage, while dividend policy is the dependent variable and sales growth acts as a moderating variable. Profitability is measured using Return on Assets (ROA), liquidity is proxied by the Current Ratio (CR), leverage is measured using the Debt to Equity Ratio (DER), and dividend policy is measured by the Dividend Payout Ratio (DPR). This study employs a quantitative approach using secondary data obtained from the annual financial statements of technology sector companies listed on the Indonesia Stock Exchange. The data are analyzed using multiple linear regression and moderated regression analysis.The results show that profitability does not have a significant effect on dividend policy, indicating that net profit generated during the year is not the main consideration in dividend distribution decisions within technology companies. Liquidity has a significant effect on dividend policy, suggesting that companies with stronger short-term financial conditions tend to have a greater ability to distribute dividends. Leverage also significantly affects dividend policy, implying that the level of corporate debt influences management decisions regarding dividend payments. Furthermore, sales growth does not moderate the relationship between profitability and dividend policy. However, sales growth is proven to moderate the effect of liquidity and leverage on dividend policy. These findings provide insights for management and investors in understanding dividend policy determinants in technology sector companies in Indonesia.

Commercial paper digitisation and corporate debt default risk:Evidence and mechanism from China

Does the Anti-Monopoly Law reshape corporate debt concentration? A quasi-natural experiment from China

Oil price uncertainty and corporate debt choice: International evidence

A moratorium denotes a temporary suspension of legal action against a corporate debtor till the resolution plan is accepted or rejected by the Adjudicating Authority. This ‘calm period’ suggested by the Bankruptcy Law Reforms Committee aligns with the objectives of the Code such as maximisation of value of assets, promote entrepreneurship, ensure availability of credit and balance the interest of all stakeholders while giving a chance to the debtor’s firm to survive as a going concern. Considering the existence of overlapping forums such as NCLT, NCDRC, RERA, DRT, RBI, SEBI and interests of diverse category of creditors like financial, operational, secured, unsecured and decree-holders, moratorium has facilitated uniform resolution. Additionally, it has given time to the corporate debtor and creditors to formulate a resolution plan and explore potential investment. While section 74 of the Code imposes punishment for contravention of moratorium, certain judicial interpretations have held its non-applicability on criminal proceedings, constitutional cases and on a personal guarantor to the corporate debtor. Whereas, the automatic application of moratorium under the Code makes it a stagnant feature leading to impediments in the smooth conduct of the insolvency resolution process. The cases pertaining to real estate particularly have been fraught with delays, jeopardizing the rights of homebuyers, obstruction for homebuyers in obtaining possession of the flat and inability of other homebuyers to initiate application under RERA and NCDRC. While application of moratorium in airline insolvencies such as the Go Air case has led to incapacity of lessors in obtaining repossession of aircrafts, inability to terminate lease agreements and use of CIRP as a tool to avoid litigation. Although, UK and Indian insolvency laws have similar objectives of providing a cooling period to the debtor to explore resolution options, the UK Corporate Insolvency and Governance Act, 2020 provides for implementation of a pre-insolvency and a restricted time moratorium before the start of formal insolvency proceeding which affords protection to the corporate debtor by allowing it to rehabilitate the company before the start of formal insolvency proceeding. Therefore, the authors with the help of doctrinal analysis will discuss the features of a moratorium under the CIRP and its effect on real estate and airline insolvencies. The thematic analysis of the paper would revolve around eight themes first, introduction. Second, effect of moratorium on corporate insolvency resolution process, third, conundrum surrounding applicability of moratorium in real estate insolvency, fourthly, impact of moratorium on lessor rights in airline insolvency, fifth, features of a detached moratorium under United Kingdom’s insolvency law, sixth, Comparative analysis of moratorium between India and UK, Seventh, a conclusion and eight, way forward for better implementation of moratorium for the benefit of all stakeholders.

ABSTRACT This study uncovers a notable influence of debt volatility on firm-level productivity and operational efficiency, with subsequent implications for resource allocation and sustainable development. Empirical findings indicate a nonlinear, inverted U-shaped linkage between fluctuations in corporate debt and total factor productivity (TFP), especially among private-sector firms and those located in China’s eastern regions. Moreover, our study indicates that capital intensity reduces TFP during debt volatility, especially in state-owned enterprises. Financing constraints serve as a mediating channel through which debt volatility impacts TFP, underscoring their role in shaping enterprise quality and efficiency. Utilizing high-dimensional fixed effects and instrumental variable approaches, we identify strategies to improve firms’ developmental efficiency.

ABSTRACT In response to slowing growth and financial uncertainty, central banks have increasingly adopted unconventional monetary policies (UMPs). Using panel fixed‐effects models with financial data from listed firms in China, the United States, and Japan during 2011–2021, this paper examines the impact of UMPs on corporate financing and cross‐country heterogeneity. Robustness is confirmed through endogeneity checks, variable substitution, and external shocks. The results show that the use of UMPs in China and the United States can increase debt financing ratio of companies, but the similar policies in Japan have the opposite effect. Policy effects differ by firm size and age, with smaller and younger firms more sensitive. Financial and political efficiency could moderate transmission. Furthermore, through the variable slope model, among the three countries, the impact of UMP on corporate debt was the strongest in China, while it was weaker in the United States and Japan. Overall, the study highlights substantial cross‐country and institutional heterogeneity in UMP transmission, offering empirical evidence for differentiated policy design and insights into optimizing monetary policy tools.

In order to tackle the urgent problems brought forth by worries about the environment, Many countries have been proactively looking at green finance methods. Green finance is a key motivator that helps environmentally conscious businesses become more economically savvy by strategically pooling funds and regularly sharing critical information. The goal of this research is to improve knowledge of financial effects of green finance and debt financing. connection between corporate debt financing levels and green finance. Our results show that corporate debt financing levels are effectively reduced by green finance, and this conclusion holds up after passing a number of hurdles. According to additional research, green finance accomplishes this by lowering loan barriers and raising top level management pay. The influence of green finance is especially noticeable in Government Owned Corporations (GOC), areas with soft market, advanced construction areas and renewable energy sources. Furthermore, our study demonstrates that green finance has no distinct effect on current liabilities but greatly encourages the decrease of bonds and leasing when regulatory rules are strengthened. The research gives firms looking to achieve sustainable growth in dynamic contexts practical insights by tying debt management to broader corporate objectives.

Recently, the focus of global businesses has expanded from solely concentrating on financial results to incorporating sustainability assessments. Environmental, Social, and Governance (ESG) principles have now become crucial in evaluating long-term corporate value. Although an increasing number of firms are adopting ESG practices, the impact of ESG on debt financing—specifically in terms of costs, terms, and access to capital—remains unclear, particularly across different regions and industries. To address this gap, the present study examines nine key academic studies spanning from 2011 to 2022, as well as case studies of non-financial listed firms in both developed (EU, US) and emerging (China) markets, such as Nestle, Microsoft, and Toyota. Utilizing ESG ratings from MSCI, Sustainalytics, and Bloomberg, the study analyzes various debt indicators, including interest rates and bond yields. The study reveals that strong ESG performance significantly reduces financing costs by 10 to 25 basis points through lower credit risk and attracts more ESG - aligned capital, as seen in Toyota’s oversubscribed 2022 ESG bonds. Additionally, ESG’s impact varies by industry, with the energy sector benefiting from environmental improvements and the retail sector from strong social practices. Overall, ESG serves as both a “risk mitigator” and a “capital magnet” in debt financing. This study underscores the importance of integrating ESG into financial strategies and offers valuable guidance for lenders, investors, and regulators.

This study examines how internal governance mechanisms shape corporate debt structure in a capital intensive and crisis exposed industry. It analyses 61 basic materials firms listed on the Indonesia Stock Exchange over 2019–2023 (305 firm year observations), a period covering pre pandemic conditions, the COVID 19 shock, post crisis recovery, and global monetary tightening. Debt structure is proxied by the debt to equity ratio (DER), which exhibits extreme volatility with values ranging from −23,124.66 to 4,950.11, indicating widespread negative equity and severe financial distress in part of the sample. The empirical model is a fixed effects panel regression with cluster robust standard errors. Board size, institutional ownership, and firm age show positive and statistically significant effects on leverage, while the proportion of independent commissioners has a strong negative effect; audit committee size and return on assets (ROA) are not significant. Firm value, measured by price to book value (PBV), has a large negative impact on DER and significantly moderates the effects of board size and independent commissioners on leverage. A PBV threshold at approximately 0.945 separates regimes where independent commissioners reduce leverage (distressed/undervalued firms) and where they facilitate higher leverage (fairly valued or overvalued firms). The findings validate a conditional multi theory framework that combines agency theory, resource dependence theory, and pecking order logic instead of relying on any single theory. They highlight that governance mechanisms are neither uniformly “good” nor “bad” for leverage but context dependent, with firm valuation and crisis conditions critically shaping their effects. The results provide implications for boards, regulators, creditors, and investors in emerging markets when designing governance structures and monitoring extreme leverage in capital intensive sectors.

Subject. The article discusses risks of a debt trap in the Russian economy. Objectives. The purpose is to identify risks of a debt trap in the Russian economy. Methods. The research is based on general scientific and special economic and mathematical methods. Results. The study highlighted a significant increase in the money supply relative to debt on loans and acquired claims on loans to resident legal entities and individual entrepreneurs, indicating the accumulation of excess liquidity in the financial system that threatens to increase inflationary pressure, reduce ruble’s purchasing power, and make debt servicing more difficult for businesses and the public. High volatility of the money supply to debt on loans ratio makes it difficult for banks to assess credit risks. Banks prefer to invest in low-risk financial instruments thus limiting the lending to small and medium-sized businesses, which slows down the development of entrepreneurship and increases imbalances in the economy. High cost of borrowings inhibits investment activity, increases the debt burden on businesses, and contributes to the formation of a "debt bubble", especially against the background of increasing dependence on government subsidies and concessional financing. Dominating corporate debt over household debt indicates an uneven distribution of financial resources thus limiting the opportunities for SMEs and increasing socio-economic stratification. Conclusions. The identified risks of a debt trap in the Russian economy are of particular value to government authorities, experts and researchers involved in the mechanism of monetary and macroeconomic regulation, and the adaptation of Russian institutions to external shocks and internal challenges.

At present, the debt problem has become a universal phenomenon worldwide. Both developed economies and emerging markets face potential risks brought about by the expansion of debt scale. As the worlds second-largest economy, China is in the process of transitioning to high-quality development, but the continuous expansion of debt scale and the increasingly prominent issue of structural imbalance have begun to constrain its long-term stable growth. Against this backdrop, this paper first analyzes the common manifestations of debt issues in the global economic environment, then elaborates on the significance of optimizing the debt structure for Chinas high-quality economic development from three dimensions, and further explores the specific mechanisms through which the debt structures of government, enterprises, and households affect the quality of economic growth in terms of resource allocation, stability, and innovation-driven capacity. Finally, it proposes optimization strategies along three paths: improving government debt orientation and management, adjusting corporate debt maturity and financing channels, and regulating household debt scale and direction. These measures aim to provide theoretical support and practical guidance for resolving Chinas debt structure dilemma and promoting sustainable high-quality economic development.

ABSTRACT As global resource demands and climate pressures grow, companies face the dual challenge of sustainability and environmental responsibility. Using panel data from U.S. publicly listed firms (2014–2022) and a text‐based proxy for climate risks, this study explores the impact of just transition climate risks on corporate debt financing. Results show climate risks increase debt financing, driven by optimized leverage and operational strategies, but also constrain financing through efficiency and liquidity pressures. Smaller firms benefit most, though supply chain stress can reduce economic value. This study provides actionable insights for strengthening resilience and competitiveness in a low‐carbon economy.

Share pledging of insiders and corporate debt contracting

Leverage, liquidity, and investment: The cyclical effects of corporate debt

Oil price volatility and corporate debt choice: Evidence from China

The impact of judicial independence on the corporate debt financing cost − Empirical evidence from China

Pilot free trade zones, technological innovation, and corporate debt financing capacity