Research on The Influence of Industrial Policy on Corporate Debt Financing Behavior

This paper explores the role of industrial policy, a key economic tool for governments to allocate social resources, in the context of China's economic transformation. This study examines the influence of industrial policy on corporate debt financing in the context of China's unique central-local government system, focusing on the period from 2001 to 2018 with data from Shanghai and Shenzhen A-share listed companies. At the same time, using similar national systems as supplementary evidence for the argument. Industrial policy, as a significant economic tool for governments to allocate resources, plays a pivotal role in economic development strategies. The study explores how these policies, especially in their variations at the central and local government levels, impact corporate debt financing. It finds that both central and local government industrial policies significantly influence corporate debt structures, with supported companies exhibiting higher total debt ratios and lower financing costs. The paper also delves into the dynamics of policy coordination and the effects of discrepancies between central and local policies on corporate financing. In instances of high policy coherence, supported companies benefit from better financing conditions. Conversely, policy discrepancies introduce uncertainties, affecting corporate financing strategies.