Social credit system and the alleviation of investment–financing maturity mismatch in China

Does improving social credit alleviate the maturity mismatch between investment and financing? We investigate this question in the context of China by leveraging the implementation of the Social Credit System (SCS) as a quasi-natural experiment. Employing a time-varying difference-in-differences model, we find that the SCS significantly curbs the practice of using short-term debt to finance long-term investments among private enterprises. Mechanism analysis reveals that the SCS improves the credit environment at the macro level while optimizing bank lending behavior and enhancing enterprise credit accessibility at the micro level, thereby alleviating the maturity mismatch. Heterogeneity analysis shows that this mitigating effect is more pronounced for firms facing higher financing constraints, limited collateral, greater investment demand, and higher R&D intensity. Further analysis indicates that the SCS promotes increased factor input among private enterprises. Overall, the study underscores the role of enhanced financial information, facilitated by the SCS, in reducing systemic financial risks.