Economic Policy Uncertainty and Corporate Debt Maturity Structure

Theoretically, under the background of rising economic policy uncertainty, the reduction in long-term capital demand caused by the decline in corporate fixed asset investment and the weakening of long-term credit supply willingness of financial institutions will both lead to the shortening of corporate debt maturity structure. Based on the panel data of China’s A-share listed companies, this paper finds that economic policy uncertainty will lead to the shortening of corporate debt maturity structure. The root cause is not at the credit demand side, but at the credit supply side. In other words, economic policy uncertainty leads to the weakening of the willingness of financial institutions to supply long-term credit. Specifically, on the one hand, it is manifested that in companies that do not have government guarantees and have greater financial risks, economic policy uncertainty has a stronger effect on shortening the corporate debt maturity structure; on the other hand, it is manifested that economic policy uncertainty leads to a larger long-term funding gap for companies, which forces companies to use short-term liabilities to support long-term investment. Further research finds that in companies with serious information asymmetry, the effect of economic policy uncertainty on the shortening of the debt maturity structure is stronger, which indicates that information asymmetry is one of the important factors that affect the willingness of financial institutions to supply long-term credit. The research in this article reveals the logic behind the changes in the maturity structure of Chinese corporate debt at this stage, which has certain significance for the effective implementation of structural deleveraging policies.