COVID-19 and Firm Debt Financing: Evidence from China

Chen Liu, Dongmin Kong and Mengxu Xiong

Emerging Markets Finance and Trade, 2025, vol. 61, issue 7, 1895-1915

Abstract: This paper explores the effects of the coronavirus disease (COVID-19) pandemic on firm debt financing. Using a novel COVID-19 sentiment index, our estimation shows that the pandemic led to an increase in loans and a drop in debt financing cost and trade credit. We contend that the government support, which provided more financing channels, and increased default risks, which placed barriers on trade credit, are the plausible mechanisms through which the COVID-19 pandemic affects firm debt financing capacity. Heterogeneity analyses show that external financing was easier for firms subject to stringent financial constraints and intense market competition despite their lowered trade credit.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2024.2435454 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:61:y:2025:i:7:p:1895-1915

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2024.2435454

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().