Background and Motivation
As broadband internet becomes essential to socioeconomic development, digital technology alters how companies operate and manage their financing. However, existing research mainly focuses on the impact of digital infrastructure on macroeconomic performance or corporate innovation, with limited attention paid to its direct effect on debt financing costs. The nature of China’s financial market—where firms rely heavily on bank loans—makes this issue especially relevant. Drawing on China’s 'Broadband China' policy, this study provides the first systematic analysis of how digital infrastructure affects corporate debt costs, filling key theoretical and empirical gaps.
Methodology and Scope
The study adopts a Difference-in-Differences (DID) approach, leveraging the quasi-natural experiment created by the phased implementation of the “Broadband China” policy from 2014 to 2016 across 120 pilot cities. This exogenous policy shock allows the identification of the causal impact of digital infrastructure on debt costs.
Key Findings and Contributions
Why It Matters
The findings hold dual significance for businesses and policymakers:
The full text is available for download as a PDF and is intended to inform and inspire a wide range of readers.
China Finance Review International
News article
Digital infrastructure and the cost of debt: evidence from “BroadBand China” policy
27-Feb-2025