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Can the deregulation of market access reduce the cost of corporate debt financing: A quasinatural experiment based on the “negative list for market access” pilot project

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  • Zhang, Han
  • Li, Yuan
  • Xiao, Chenlei
  • Wang, Xiaoyan

Abstract

Based on the quasinatural experiment of implementing the “negative list for market access” pilot project in batches in different provinces of China from 2016 to 2017, we use the difference-in-differences (DID) method to test the impact of the deregulation of market access on the cost of corporate debt financing. Our results show that (1) the deregulation of market access can significantly reduce the cost of corporate debt financing; (2) the mechanism test shows that the mechanism for reducing the cost of corporate debt financing is to reduce transaction costs; (3) the implementation of the pilot project has a significant effect on reducing the debt financing cost of companies in regions with low marketization degree of credit fund allocation or of non-SOE firms; (4) after implementing the pilot project, the proportion of corporate debt financing in total financing increased. Deregulating market access is an important part of supply-side structural reform (in short, supply-side reform), an economic policy reform in China starting in 2015. This research enriches the literature on the “cost reduction” of China's supply-side reform.

Suggested Citation

  • Zhang, Han & Li, Yuan & Xiao, Chenlei & Wang, Xiaoyan, 2024. "Can the deregulation of market access reduce the cost of corporate debt financing: A quasinatural experiment based on the “negative list for market access” pilot project," International Review of Financial Analysis, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005331
    DOI: 10.1016/j.irfa.2023.103017
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    Keywords

    Negative list for market access; Financing constraints; Debt financing cost; Supply-side reform;
    All these keywords.

    JEL classification:

    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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