Corporate credit mismatch, financial leverage and corporate investment efficiency

Teng Qin and Shun Gong

Finance Research Letters, 2024, vol. 68, issue C

Abstract: We empirically test the relationship between credit mismatch and corporate investment efficiency. The study analyzes the heterogeneity of mismatch direction, corporate nature, and corporate life cycle. Results reveal that corporate credit mismatch has a significant negative impact on corporate investment efficiency; corporate financial leverage fully mediates this impact, indicating that corporations may increase their financial leverage to bridge financing gaps in cases of credit mismatch. This practice, however, may bring about greater financial risk and affect corporate investment efficiency. This study provides an important reference for enterprises and financial institutions for optimizing the financing environment, ensuring the effective allocation of financing resources, promoting the sustainable development of enterprises, thereby enhancing overall economic efficiency. This study also provides new ideas and future directions for studying corporate financing and investment behavior.

Keywords: Corporate credit mismatch; Financial leverage; Corporate investment efficiency; Mediation effect (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:68:y:2024:i:c:s1544612324010080

DOI: 10.1016/j.frl.2024.105978

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