Rule of Law and Bond Credit Risk: A Perspective Based on Debt Structure

Wentao Peng ()
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Wentao Peng: Jinan University, School of Economics

A chapter in Proceedings of the 2025 3rd International Conference on Digital Economy and Management Science (CDEMS 2025), 2025, pp 629-633 from Springer

Abstract: Abstract Building a good legal environment is of great significance to the high-quality development of China’s bond market. This article uses quasi natural experiments on the establishment of bankruptcy courts in various regions of China and uses the difference in differences method to identify the impact of legal strengthening on bond credit risk under different debt structures of enterprises. Research has found that the establishment of bankruptcy courts can significantly reduce the secondary market spread of local corporate bonds, and in the case of increased corporate bank debt, the establishment of bankruptcy courts will significantly increase the credit spread of bonds. The research conclusion of this article indicates that the construction of the rule of law environment should be combined with the reasonable adjustment of the debt structure of the issuing enterprises themselves in order to better play the role of institutional construction and promote the high-quality development of China’s finance.

Keywords: Rule of Law; Bond Market; Creditor Protection; Information Asymmetry; Debt Structure (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-770-0_72

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DOI: 10.2991/978-94-6463-770-0_72

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