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Interest rate marketization and corporate social responsibility

Author

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  • Wang, Yao
  • Sun, Guangfan
  • Yan, Xu
  • Zhang, Yunmeng

Abstract

This study examines how interest rate marketization influences corporate social responsibility (CSR) performance and its underlying mechanisms through a quasi-natural experiment after the removal of the lending rate floor in China. Findings indicate that liberalizing the lending rate floor enhances CSR, particularly among firms with stronger signaling motives and higher signaling earnings. This suggests that interest rate marketization motivates firms to actively engage in CSR to positively signal banks and secure credit resources. Results show that firms with superior CSR tend to receive more low-cost loans after interest rate marketization. These findings highlight that financial marketization reform serves as an intrinsic motivator for firms to fulfill their CSR and emphasize the importance of promoting market development reform in transition economies.

Suggested Citation

  • Wang, Yao & Sun, Guangfan & Yan, Xu & Zhang, Yunmeng, 2025. "Interest rate marketization and corporate social responsibility," Finance Research Letters, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:finlet:v:83:y:2025:i:c:s1544612325010037
    DOI: 10.1016/j.frl.2025.107745
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    References listed on IDEAS

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    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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