The effects of macroeconomic uncertainty on corporate default risk: evidence from China

Rui Wang and Zhuo Huang

China Economic Journal, 2025, vol. 18, issue 1, 131-154

Abstract: In this study, using a novel measure of provincial macroeconomic uncertainty in China, we examine the heterogeneous impacts of rising economic uncertainty on the default risk of private firms relative to state-owned enterprises (SOEs). We find that increasing macroeconomic uncertainty significantly raises the probability of default for private firms, while having little impact on SOEs. This relationship holds when using a matched sample of private firms and SOEs, controlling for multiple sets of fixed effects, and utilizing alternative measures of economic uncertainty. Additionally, the adverse impact of macroeconomic uncertainty on corporate default risk is more pronounced for private firms with severe financing constraints. Our analysis highlights deteriorating corporate performance and reduced access to external financing as key channels through which rising macroeconomic uncertainty disproportionately affects private firms.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/17538963.2024.2399953 (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:taf:rcejxx:v:18:y:2025:i:1:p:131-154

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rcej20

DOI: 10.1080/17538963.2024.2399953

Access Statistics for this article

China Economic Journal is currently edited by Tiechang Gao and Yiping Huang

More articles in China Economic Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().