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Central bank digital currency and corporate debt financing costs: Empirical evidence from China

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  • Xiao, Zumian
  • Niu, Yiran
  • Xiang, Lijin
  • Cui, Yingshuo

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.

Suggested Citation

  • Xiao, Zumian & Niu, Yiran & Xiang, Lijin & Cui, Yingshuo, 2024. "Central bank digital currency and corporate debt financing costs: Empirical evidence from China," Finance Research Letters, Elsevier, vol. 69(PB).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pb:s1544612324012248
    DOI: 10.1016/j.frl.2024.106195
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    Cited by:

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    2. Li, Wenxue & Liu, Fei, 2025. "Digital currency adoption and macroeconomic stability: A quasi-natural experiment," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 561-568.
    3. Jitender Kumar & Manju Rani, 2025. "Past, present and future of central bank digital currency: a systematic literature review and relevant issues," Journal of Banking Regulation, Palgrave Macmillan, vol. 26(4), pages 701-720, December.
    4. Oprea Isabelle Margareta & Draghici Liviu-Gelu & Panait Cornel, 2025. "Banking Digitization And Central Bank Digital Currency Projects, Implications For Monetary Policy And Financial Stability," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 307-327, June.
    5. Cai, Yongbin & Tan, Xinyu & Fang, Wenbin & Nahar, Shamsun & Wang, Feiyang, 2025. "Digital inclusive finance and corporate debt financing: Empirical evidence from China," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 494-509.
    6. Luo, Ruixin & Fu, Rong, 2025. "CEO legal liability, financing cost, and Firms’ S&T innovation efficiency," Finance Research Letters, Elsevier, vol. 86(PA).
    7. Umar, Muhammad, 2025. "Does CBDC launch increase tax collection? empirical evidence from China," Finance Research Letters, Elsevier, vol. 71(C).

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System

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