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Does credit information sharing affect corporate debt concentration? Evidence from China

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  • Zhu, Zhiliang
  • Song, Wuqi

Abstract

Credit information sharing reduces creditors' information collection and monitoring costs, facilitates creditor coordination, and enables firms to adopt a more dispersed debt structure. We examine the impact of improved access to credit information, spurred by public credit information arrangements, on firms' debt concentration. Using the Construction of China's Social Credit System (CSCS) as an exogenous shock to the availability of credit files, we employ a difference-in-differences analysis and find that CSCS decreases corporate debt concentration. This shift is driven by reduced information opacity and lower default risk. The effect is more pronounced for firms with lower liquidation values and those in regions with weaker formal institutions. Additionally, we observe that CSCS increases the use of commercial paper and term loans for debt financing. Our study underscores the role of credit information sharing in shaping firms' debt concentration strategies.

Suggested Citation

  • Zhu, Zhiliang & Song, Wuqi, 2025. "Does credit information sharing affect corporate debt concentration? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:pacfin:v:90:y:2025:i:c:s0927538x24003731
    DOI: 10.1016/j.pacfin.2024.102621
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