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Does economic policy uncertainty shorten the loan term structure? Evidence from China

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Listed:
  • Qianlong Ma

    (Beijing Wuzi University)

  • Bokun Hei

    (Beijing Wuzi University)

  • Guangchen Li

    (Beijing Wuzi University)

Abstract

Using Chinese listed companies from 2011 to 2021, we employ textual analysis to examine the influence of the subjective perception of economic policy uncertainty (SPEPU) on the loan term structure of enterprises. The results show that SPEPU shortens the loan term structure of enterprises. After robustness tests, our results are still valid. Mechanism analysis shows that SPEPU works through increasing corporate financing costs and reducing corporate ESG performance. Moreover, reducing financing constraints and improving financial environment will alleviate this phenomenon. Additionally, in state-owned enterprises, enterprises with large performance fluctuations and good internal control, this phenomenon is more pronounced. Further analysis reveals a trend of short-term borrowing for long-term use, where short-term bank loans are used to offset the shortage of long-term bond financing and fixed asset investments. The conclusions have important significance for enterprises to mitigate liquidity risk and operate smoothly during economic fluctuations.

Suggested Citation

  • Qianlong Ma & Bokun Hei & Guangchen Li, 2024. "Does economic policy uncertainty shorten the loan term structure? Evidence from China," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-25, August.
    • Handle: RePEc:kap:ecopln:v:57:y:2024:i:4:d:10.1007_s10644-024-09738-2
    DOI: 10.1007/s10644-024-09738-2
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