Economic policy uncertainty and corporate investment: evidence from China

Xiangyuan Meng (), Haoge Guo () and Jie Li ()
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Xiangyuan Meng: Shandong University of Finance and Economics
Haoge Guo: Central University of Finance and Economics
Jie Li: Central University of Finance and Economics

Economic Change and Restructuring, 2023, vol. 56, issue 6, No 29, 4529 pages

Abstract: Abstract We investigate the impact of economic policy uncertainty (EPU) on corporate investment. Employing the EPU index at the province level in China and firm level data from the Annual Census of Industrial Enterprises, our analysis reveals that the heightened EPU significantly reduces corporate investment. Specifically, empirical estimates show that 1% increase in the EPU index is associated with 0.051% decrease in corporate investment. Furthermore, the adverse repercussions of EPU on corporate investment are significantly more pronounced for the smaller, younger and less efficient firms as well as those with higher financial vulnerability and less credit loans.

Keywords: Economic policy uncertainty; Corporate investment; Financing capability (search for similar items in EconPapers)
JEL-codes: D21 G31 P26 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10644-023-09564-y

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