IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v87y2026ics1544612325023815.html

Commercial paper digitisation and corporate debt default risk:Evidence and mechanism from China

Author

Listed:
  • Zhang, Le
  • Shang, Longwen
  • Huang, Min

Abstract

This study exploits the exogenous policy shock stemming from the establishment of the Shanghai Commercial Paper Exchange (SHCPE) to empirically examine the impact of commercial paper digitisation on corporate debt default risk. Using a difference-in-differences model with data from China’s A-share listed firms (2011–2022), we find that institutionalised digitisation driven by SHCPE significantly reduces debt default risk for commercial paper-reliant firms. Mechanism analyses confirm that risk mitigation operates by enhancing operational capacity through accelerated settlement, optimising internal capital allocation via improved liquidity, and reducing debt financing costs by alleviating information asymmetry. These findings provide micro-level evidence on how regulatory technology reshapes corporate financial resilience and offer critical insights for financial infrastructure digitalisation.

Suggested Citation

  • Zhang, Le & Shang, Longwen & Huang, Min, 2026. "Commercial paper digitisation and corporate debt default risk:Evidence and mechanism from China," Finance Research Letters, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finlet:v:87:y:2026:i:c:s1544612325023815
    DOI: 10.1016/j.frl.2025.109132
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325023815
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.109132?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. Xia, Yanchun & Qiao, Zhilin & Xie, Guanghua, 2022. "Corporate resilience to the COVID-19 pandemic: The role of digital finance," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    2. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    3. Cui, Lin & Wang, Yanshu, 2023. "Can corporate digital transformation alleviate financial distress?," Finance Research Letters, Elsevier, vol. 55(PB).
    4. Dmitry Arkhangelsky & Susan Athey & David A. Hirshberg & Guido W. Imbens & Stefan Wager, 2021. "Synthetic Difference-in-Differences," American Economic Review, American Economic Association, vol. 111(12), pages 4088-4118, December.
    5. Pittman, Jeffrey A. & Fortin, Steve, 2004. "Auditor choice and the cost of debt capital for newly public firms," Journal of Accounting and Economics, Elsevier, vol. 37(1), pages 113-136, February.
    6. Matthias Kahl & Anil Shivdasani & Yihui Wang, 2015. "Short-Term Debt as Bridge Financing: Evidence from the Commercial Paper Market," Journal of Finance, American Finance Association, vol. 70(1), pages 211-255, February.
    7. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 17(Nov), pages 2-20.
    8. Huangfu, Mingguo & Wang, Zejun & Li, Jiatong & Ye, Xinhai & Wang, Xiaoye & Chen, Mengyao, 2024. "Commercial paper popularization and enterprise risk taking," Finance Research Letters, Elsevier, vol. 64(C).
    9. Huang, Yin-Siang, 2025. "When geopolitical risks hit the supply chain: Impacts on credit default swap market," Finance Research Letters, Elsevier, vol. 82(C).
    10. Olivier de Bandt & Laura‐Chloé Kuntz & Nora Pankratz & Fulvio Pegoraro & Haakon Solheim & Gregory Sutton & Azusa Takeyama & Fan Dora Xia, 2025. "The effects of climate change‐related risks on banks: A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 39(4), pages 1553-1594, September.
    11. Murillo Campello & Mauricio Larrain, 2016. "Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity," The Review of Financial Studies, Society for Financial Studies, vol. 29(2), pages 349-383.
    12. Umeair Shahzad & Fukai Luo & Jing Liu, 2023. "Debt financing and technology investment Kuznets curve: Evidence from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 751-765, January.
    13. Javadi, Siamak & Mollagholamali, Mohsen, 2018. "Debt market illiquidity and correlated default risk," Finance Research Letters, Elsevier, vol. 26(C), pages 266-273.
    14. Kun Wang & Yaozhi Chen & Yao Liu & Yingkai Tang, 2023. "Board secretary’s financial experience, overconfidence, and SMEs’ financing preference: Evidence from China’s NEEQ market," Journal of Small Business Management, Taylor & Francis Journals, vol. 61(4), pages 1378-1410, July.
    15. Chen, Gaocai & Liu, Peng & Jiang, Aiying, 2024. "Does digital transformation in enterprises reduce debt default risk?," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    16. Eliana La Ferrara & Alberto Chong & Suzanne Duryea, 2012. "Soap Operas and Fertility: Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 1-31, October.
    17. Yonggen Luo & Miaomiao Fang & Antai Li & Shiqiang Chen, 2024. "Opportunity or opportunism? Blockchain technology adoption and corporate default risk," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-14, December.
    18. Sreedhar T. Bharath & Tyler Shumway, 2008. "Forecasting Default with the Merton Distance to Default Model," The Review of Financial Studies, Society for Financial Studies, vol. 21(3), pages 1339-1369, May.
    19. Balci, Gökcay, 2021. "Digitalization in container shipping: Do perception and satisfaction regarding digital products in a non-technology industry affect overall customer loyalty?," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    20. Chen, Xi & Wang, Qinggang & Wang, Shuai, 2025. "Enterprise digital transformation and bank credit loans—Empirical evidence from listed companies in China," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    21. Wan, Xiaoli & Margaritis, Dimitris, 2024. "Shadow banking and loan pricing of commercial banks: Evidence from China," Emerging Markets Review, Elsevier, vol. 60(C).
    Full references (including those not matched with items on IDEAS)

    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. Zou, Tao & Li, Shasha & Dai, Yixin, 2025. "Does the pilot free trade zone promote “quality improvement and quantity increase” of the city’s export trade?," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1323-1341.
    2. Lin, Minghai & Peng, Bo, 2025. "Does regional coordinated development enhance urban resilience? Evidence from China's Beijing-Tianjin-Hebei region," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1232-1261.
    3. Zou, Ganna & Zhang, Shengbo & Gan, Xingqiong & Cheng, Hua, 2025. "How government green procurement incentivises corporate green innovation? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1605-1626.
    4. Li, Jiaxuan & Liang, Shuzhen & Ye, Yongwei & Chen, Changjian, 2026. "Product market competition and corporate human capital upgrading: Evidence from China’s Anti-Monopoly Law," Journal of Asian Economics, Elsevier, vol. 102(C).
    5. Ling-Yun He & Xiao-Feng Qi, 2021. "Environmental Courts, Environment and Employment: Evidence from China," Sustainability, MDPI, vol. 13(11), pages 1-16, June.
    6. Qingxi Wang & Yueji Xin & An hu & Yanan Du, 2025. "Stimulating energy efficiency by low-carbon transformation: Evidence from low-carbon city pilot in China," Energy & Environment, , vol. 36(7), pages 3463-3480, November.
    7. Wang, Yijing & Xi, Kang, 2026. "Carbon markets, industrial robots, and the labour skill premium," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 986-1004.
    8. Huang, Yuhong & Chen, Xiaozhou & Chen, Xinmin, 2026. "Social credit environment and corporate trade credit financing: Evidence from China," Journal of Business Research, Elsevier, vol. 205(C).
    9. Li, Rui & Yang, Huiting & Zhang, Jun, 2024. "Agricultural tax reform, capital investment, and structural transformation in China," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 509-522.
    10. Luo, Hanlin & Chen, Lusi & Xu, Xin, 2025. "How the disclosure of government public data stimulates corporate green transitions," International Review of Economics & Finance, Elsevier, vol. 103(C).
    11. Sun, Boyang & Shi, Guifen & Yan, Yutong & Chen, Zhizhen, 2026. "Strict financial regulation and corporate credit availability: Evidence from the new asset management regulation in China," International Review of Economics & Finance, Elsevier, vol. 105(C).
    12. Sun, Yajie & Liao, Wen-Chi, 2021. "Resource-Exhausted City Transition to continue industrial development," China Economic Review, Elsevier, vol. 67(C).
    13. Wang, Ruqi & Xu, Pei & Gao, Honggui, 2024. "Rectifying local governments’ strategic environmental enforcement: Can refined air pollution monitoring enhance local air quality in China?," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 978-995.
    14. Li, Bo & Han, Yukai & Wang, Chensheng & Sun, Wei, 2022. "Did civilized city policy improve energy efficiency of resource-based cities? Prefecture-level evidence from China," Energy Policy, Elsevier, vol. 167(C).
    15. Yi Li & Lili Ding & Yongliang Yang, 2020. "Can the Introduction of an Environmental Target Assessment Policy Improve the TFP of Textile Enterprises? A Quasi-Natural Experiment Based on the Huai River Basin in China," Sustainability, MDPI, vol. 12(4), pages 1-19, February.
    16. Hu, Wen-Quan & Fang, Jiewei, 2025. "Green credit and firms’ emission reduction performance: Evidence from China," World Development, Elsevier, vol. 194(C).
    17. Xufei Zhang & Hongsheng Fang & Lin Guo, 2023. "Corporate Endowment Insurance Fee Reduction and Employee Wages: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(2), pages 192-222, March.
    18. Yihao Tian & Lijin Ding & Bin Yang & Feng Peng, 2022. "The Effects of De-Capacity Policy on Steel and Coal Firms’ Profitability: Evidence from China’s Listed Companies," Energies, MDPI, vol. 15(12), pages 1-17, June.
    19. Zhang, Jinlong & Zhang, Wei & E, Jiyue, 2025. "The impact of biodiversity regulation on audit pricing − A quasi-natural experiment based on the Green Shield Program," The Quarterly Review of Economics and Finance, Elsevier, vol. 103(C).
    20. Song, Jinbo & Nie, Rong & Yuan, Hehui & Gao, Jingxin, 2023. "Does the renovation of waste-to-energy incineration plants attenuate the housing price gradient? Evidence from a quasi-natural experiment in Shenzhen, China," Energy Economics, Elsevier, vol. 120(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    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:87:y:2026:i:c:s1544612325023815. 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.