Who is Boosting to the Target Leverage in Economic Policy Uncertainty? Evidence from China

Wenjie Chen, Hongyan Zhao and Juanjuan Chen

Hitotsubashi Journal of Economics, 2022, vol. 63, issue 1, 86-103

Abstract: This study explores how economic policy uncertainty (EPU) and financing supply chain jointly affect the leverage adjustment decision of China firms. Using the estimated targets across the distribution, we conceive a research framework that allows EPU to interact with financing supply chain in dynamic panel regression models. Our result reveals that EPU and financing supply chain arejointly important in affecting firmʼs leverage adjustment. It also suggests theconditions that can beuse d to assist peopleto makequick judgment about whether firms will have strong intentions of adjusting leverage towards target. Moreover, we find some conditions can symmetrically affect above and below-target firmsʼ intentions of adjusting leverage.

Keywords: Economic policy uncertainty; Financing supply chain; Leverage adjustment; China (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:63:y:2022:i:1:p:86-103

DOI: 10.15057/hje.2022005

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