Credit Risk Side of CSR: A New Angle for Building China’s Sustainable Cycle under the Reform of the Security Interest System

Lin Zou () and Wanyi Chen
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Lin Zou: School of Intellectual Property, Faculty of Law, Xiangtan University, Xiangtan 411105, China
Wanyi Chen: School of Credit Risk Management, Faculty of Law, Xiangtan University, Xiangtan 411105, China

Sustainability, 2025, vol. 17, issue 20, 1-20

Abstract: Amid growing economic uncertainty and rising corporate default risks, effective legal reforms are essential for financial stability and sustainable business practices. This study examines the impact of China’s security interest system reform on corporate credit risk, highlighting its implications for corporate social responsibility (CSR) and sustainable development. Using a Difference-in-Differences approach and data from Chinese listed firms, the results show that the reform significantly reduces credit risk, particularly for asset-light, risk-averse, and growth-stage enterprises. Lower credit risk alleviates financing constraints, enabling firms to allocate more resources to Environmental, Social, and Governance (ESG) activities and long-term sustainability initiatives. The findings reveal that legal reforms in secured transactions not only serve as risk management tools but also function as institutional mechanisms that foster CSR engagement and contribute to building a sustainable economic cycle. This research fills a gap in linking legal system reform, credit risk mitigation, and CSR, offering practical insights for future policy design in sustainable finance and green innovation.

Keywords: security interest reform; corporate credit risk; corporate social responsibility (CSR); sustainable development; difference-in-differences (DID); natural experiment; institutional innovation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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