Economic policy uncertainty and corporate bond credit spreads in China: insights from a system GMM approach on sustainable financial practices, Weijing Kang, Dr Abdul Hadi Zulkafli, Dr Md Aslam Mia
Weijing Kang
School of Economics and Management, Lyuliang University, Lishi District, Lvliang City 033001, Shanxi, China
School of Management, Universiti Sains Malaysia, 11800 USM Penang, Malaysia
Dr Abdul Hadi Zulkafli
School of Management, Universiti Sains Malaysia
11800 USM Penang
Malaysia
ORCID: 0000-0002-8299-6387
Dr Md Aslam Mia
School of Management, Universiti Sains Malaysia, 11800 USM Penang, Malaysia
Miyan Research Institute, International University of Business Agriculture and Technology
1230, Dhaka, Bangladesh
ORCID: 0000-0002-6452-1126
Type of Paper: Research
Received: 7 Augusts 2024 / Revised: 17 November 2024 / Accepted: 22 November 2024 / Published: 30 December 2024
DOI: 10.47556/J.WJEMSD.20.3-4.2024.5
Purpose: The economy has entered a new normal in China and the transformation and upgrading of the economic structure has exacerbated the risks in the financial market. This study aims to investigate economic policy uncertainty and corporate bond credit spreads in China.
Methodology: A total of 3,265 corporate bonds derived from Chinese A-share listed firms between 2011 and 2020 are explored, and the dynamic unbalanced panel one-step system Generalised Method of Moments is used.
Findings: The results indicate that economic policy uncertainty has a significantly positive relationship with credit spreads of corporate bonds and different dimensions of economic policy uncertainty, including monetary policy uncertainty. Fiscal policy uncertainty also has a significantly positive relationship with credit spreads.
Originality: This study discovers the impact of economic policy uncertainty on corporate bond credit spreads in China, contributing insights into sustainable financial practices.
Keywords: Credit Spreads of Corporate Bonds; Economic Policy Uncertainty; Monetary Policy Uncertainty; Fiscal Policy Uncertainty; Executive Compensation.
Citation: Kang, W., Zulkafli, A.H. and Mia, A. (2024): Economic Policy Uncertainty and Corporate Bond Credit Spreads in China: Insights from a System GMM Approach on Sustainable Financial Practices. World Journal of Entrepreneurship, Management and Sustainable Development, Vol. 20, Nos 3-4, pp.265-282.