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Supply chain risks and the cost of debt: Evidence from the COVID-19 pandemic

Author

Listed:
  • Ye, Yanyi
  • Wang, Hongping
  • Tian, Kailan
  • Li, Meng

Abstract

This study aims to examine the impact of supply chain risks on the cost of debt. Our analysis is based on a comprehensive dataset of corporate bond offerings of listed firms. We utilize input−output tables to construct the proxies for supply chain risks that capture trade credit financing risks. The results demonstrate that supply chain risks substantially raise the corporate cost of debt and that the effects are magnified during COVID-19. The effects are more pronounced for firms in industries that were hit by COVID-19 more severely, those with high supply chain concentration, state-owned enterprises, and firms in financial distress. Our results are robust to alternative measures of the cost of debt, supply chain risk, and alternative samples. Our study suggests that supply chain security and stability are crucial for ensuring the smooth operation of businesses and maintaining a stable economy.

Suggested Citation

  • Ye, Yanyi & Wang, Hongping & Tian, Kailan & Li, Meng, 2024. "Supply chain risks and the cost of debt: Evidence from the COVID-19 pandemic," Research in International Business and Finance, Elsevier, vol. 70(PB).
    • Handle: RePEc:eee:riibaf:v:70:y:2024:i:pb:s0275531924001922
    DOI: 10.1016/j.ribaf.2024.102399
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    More about this item

    Keywords

    Supply chain risks; Trade credit; Cost of debt; Input–output linkages; COVID-19;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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