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Broadband policy and bank loans

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  • Li, Donghui
  • Li, Yuan
  • Yuan, Chun

Abstract

Using a unique loan-level dataset from a nationwide state-owned commercial bank in China, we find that loan pricing of borrowing firms decreases significantly following a staggered implementation of Broadband China by reducing the costs of information gathering and transmission for banks as well as increasing the firm business environment. This effect is more pronounced when borrowing firms are smaller, followed by fewer analysts, or located in regions with low degrees of marketization and education. We also find that broadband policy increases the loan size. We conduct various robustness tests to consider endogeneity issues, following which our main conclusions remain valid.

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  • Li, Donghui & Li, Yuan & Yuan, Chun, 2025. "Broadband policy and bank loans," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:pacfin:v:90:y:2025:i:c:s0927538x24003822
    DOI: 10.1016/j.pacfin.2024.102630
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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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