IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v80y2025ics154461232500618x.html

The influence of business environment optimization on corporate bond financing costs

Author

Listed:
  • Kong, Deli
  • Li, Xidian

Abstract

This study empirically examines the impact of business environment improvements on corporate bond financing costs for corporate bonds, enterprise bonds, and medium-term notes issued in China between 2018 and 2023. The findings indicate that enhanced business environments contribute significantly to reducing corporate bond financing costs. Further analysis reveals that the financing costs of state-owned enterprises, larger enterprises, and enterprises with higher credit ratings are particularly responsive to the quality of the local business environment. By mitigating information asymmetry, business environment optimizations lead to lower bond financing costs for these enterprises.

Suggested Citation

  • Kong, Deli & Li, Xidian, 2025. "The influence of business environment optimization on corporate bond financing costs," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s154461232500618x
    DOI: 10.1016/j.frl.2025.107357
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S154461232500618X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.107357?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Wang, Xiaozhen & Liu, Shan & Tao, Ziyang & Cao, Qun, 2022. "The impact of industrial policy and its combinations on the innovation quality of wind power enterprises: A study from the perspective of financing modes," Renewable Energy, Elsevier, vol. 188(C), pages 945-956.
    2. Li, Quan & Chen, Huimin & Chen, Yang & Xiao, Tong & Wang, Li, 2023. "Digital economy, financing constraints, and corporate innovation," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    3. Broadstock, David & Chen, Xiaoqi, 2021. "Corporate site visits, private monitoring and fraud: Evidence from China," Finance Research Letters, Elsevier, vol. 40(C).
    4. Wu, Keping & Fu, Yumei & Kong, Dongmin, 2022. "Does the digital transformation of enterprises affect stock price crash risk?," Finance Research Letters, Elsevier, vol. 48(C).
    5. Kong, Dongmin & Shi, Lu & Zhang, Fan, 2021. "Explain or conceal? Causal language intensity in annual report and stock price crash risk," Economic Modelling, Elsevier, vol. 94(C), pages 715-725.
    6. Verhoef, Peter C. & Broekhuizen, Thijs & Bart, Yakov & Bhattacharya, Abhi & Qi Dong, John & Fabian, Nicolai & Haenlein, Michael, 2021. "Digital transformation: A multidisciplinary reflection and research agenda," Journal of Business Research, Elsevier, vol. 122(C), pages 889-901.
    7. Chen, Shengqi & Zhang, Hong, 2021. "Does digital finance promote manufacturing servitization: Micro evidence from China," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 856-869.
    8. Tian, Guangning & Li, Bo & Cheng, Yue, 2022. "Does digital transformation matter for corporate risk-taking?," Finance Research Letters, Elsevier, vol. 49(C).
    9. Fang, Zhenming & Kong, Xiaoran & Sensoy, Ahmet & Cui, Xin & Cheng, Feiyang, 2021. "Government’s awareness of Environmental protection and corporate green innovation: A natural experiment from the new environmental protection law in China," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 294-312.
    10. Liu, Xing & Liu, Fengzhong, 2022. "Environmental regulation and corporate financial asset allocation: A natural experiment from the new environmental protection law in China," Finance Research Letters, Elsevier, vol. 47(PA).
    11. Dongmin Kong & Junyi Xiang & Jian Zhang & Yiyang Lu, 2019. "Politically connected independent directors and corporate fraud in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(5), pages 1347-1383, March.
    12. Xu, Guiyang & Li, Guanggui & Sun, Peibo & Peng, Dan, 2023. "Inefficient investment and digital transformation: What is the role of financing constraints?," Finance Research Letters, Elsevier, vol. 51(C).
    13. Andreas Fuster & Matthew Plosser & Philipp Schnabl & James Vickery, 2019. "The Role of Technology in Mortgage Lending," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1854-1899.
    14. Niu, Yuhao & Wen, Wen & Wang, Sai & Li, Sifei, 2023. "Breaking barriers to innovation: The power of digital transformation," Finance Research Letters, Elsevier, vol. 51(C).
    15. Li, Xin & Shao, Xuefeng & Chang, Tsangyao & Albu, Lucian Liviu, 2022. "Does digital finance promote the green innovation of China's listed companies?," Energy Economics, Elsevier, vol. 114(C).
    16. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).
    17. Su, Fei & Feng, Xu & Tang, Songlian, 2021. "Do site visits mitigate corporate fraudulence? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 78(C).
    18. Gam, Yong Kyu & Gupta, Paramita & Im, Jieun & Shin, Hojong, 2021. "Evasive shareholder meetings and corporate fraud," Journal of Corporate Finance, Elsevier, vol. 66(C).
    19. Sun, Guanglin & Li, Ting & Ai, Yongfang & Li, Qinghai, 2023. "Digital finance and corporate financial fraud," International Review of Financial Analysis, Elsevier, vol. 87(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiang, Yulai, 2025. "Government digital governance and corporate green total factor productivity," International Review of Economics & Finance, Elsevier, vol. 102(C).
    2. Luo, Ruixin & Fu, Rong, 2025. "CEO legal liability, financing cost, and Firms’ S&T innovation efficiency," Finance Research Letters, Elsevier, vol. 86(PA).
    3. Zhou, Yong & Zhang, Jin, 2025. "How does anti-unfair competition law reduce enterprises' financing costs?," Finance Research Letters, Elsevier, vol. 85(PC).
    4. Yarong Shi & Yahan Jin, 2025. "How Fintech Impacts Urban Economic Resilience: A Perspective on the Empowerment of Digital Inclusive Finance," Sustainability, MDPI, vol. 17(17), pages 1-24, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sun, Guanglin & Li, Ting & Ai, Yongfang & Li, Qinghai, 2023. "Digital finance and corporate financial fraud," International Review of Financial Analysis, Elsevier, vol. 87(C).
    2. Xu, Chao & Sun, Guanglin & Kong, Tao, 2024. "The impact of digital transformation on enterprise green innovation," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 1-12.
    3. He, Yan & Lin, Chen, 2025. "Dynamic impact of media coverage on corporate risk management: Moderating effect of environmental policies and heterogeneity analysis," International Review of Economics & Finance, Elsevier, vol. 100(C).
    4. Zhang, Ping & Wang, Yiru, 2025. "Digital finance and stock price crash: Evidence from China," Emerging Markets Review, Elsevier, vol. 66(C).
    5. Wang, Yihui & Ge, Xiangyu, 2025. "Digital finance, investor sentiment, and corporate inefficient investment," Finance Research Letters, Elsevier, vol. 83(C).
    6. Zhang, Ruchuan & Gao, Weiyan & Chen, Shanshan & Zhou, Li & Li, Aijun, 2024. "Dose digital transformation contribute to improving financing efficiency? Evidence and implications for energy enterprises in China," Energy, Elsevier, vol. 300(C).
    7. Liao, Hongji & Zhang, Jiarui & Gong, Runze & Zhang, Wen, 2025. "The mitigating effect of digital inclusive finance development on urban environmental pollution: Insights from innovation capacity and financing constraints," International Review of Financial Analysis, Elsevier, vol. 97(C).
    8. Li, Jing, 2025. "Corporate governance, fraud learning cycles, and financial fraud detection: Evidence from Chinese listed firms," Research in International Business and Finance, Elsevier, vol. 76(C).
    9. Wu, Ke & Zhang, Yongfang & Chen, Ying & Li, Miao, 2025. "Impact of digital finance on corporate ESG," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    10. Zheng, Minyu, 2025. "Digital finance, financing constraints, and regional trade development," Finance Research Letters, Elsevier, vol. 85(PC).
    11. Ziyuan Sun & Xiao Sun & Wenjiao Wang & Wei Wang, 2025. "Digital transformation and greenwashing in environmental, social, and governance disclosure: Does investor attention matter?," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 34(1), pages 81-102, January.
    12. Ayaz, Muhammad & Anwer, Zaheer & Hassan, M. Kabir & Xiaoyang, Xu, 2025. "Inhabiting influence of digital finance on stock price synchronicity," Global Finance Journal, Elsevier, vol. 64(C).
    13. Li, Qinyang & Li, Mingrui & Li, Mengru & Li, Tao, 2025. "Digital ripples: The impact of customers' digital transformation on the financing constraints of suppliers," International Review of Financial Analysis, Elsevier, vol. 105(C).
    14. Li, Shuang & Xie, Nan, 2025. "The impact of digital finance on firms' digital Transformation: Mechanism analysis based on enterprise financing," International Review of Economics & Finance, Elsevier, vol. 101(C).
    15. Li, Yu & Bai, Tianpeng & Sha, Ya & Xu, Zitong, 2025. "Concentration of supply chain, internal control, and corporate risk-taking," International Review of Financial Analysis, Elsevier, vol. 103(C).
    16. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).
    17. Wang, Mansi & Yu, Xinxin & Hong, Xinyi & Yang, Xiaotao, 2025. "Can digital finance promote green innovation collaboration in enterprises?," Global Finance Journal, Elsevier, vol. 65(C).
    18. Xiao, Zhongyi & Li, Yuanling & Xiang, Cheng, 2025. "Do suppliers value customer firms' digital transformation? Evidence from trade credit provision," International Review of Financial Analysis, Elsevier, vol. 99(C).
    19. Lin, Tianchen & Yang, Haolong, 2025. "How does urban digital finance drive low-carbon development? evidence from China’s green transition," Finance Research Letters, Elsevier, vol. 86(PF).
    20. Zhang, Huatao & Bi, Tao & Shen, Yunqiao & Tu, Sophia Zimeng, 2025. "The effects of intellectual property protection on corporate digital transformation," International Review of Economics & Finance, Elsevier, vol. 103(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:80:y:2025:i:c:s154461232500618x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.