The Impact Of Capital Market Internationalization On Corporate Debt Financing Costs

Since its accession to the WTO in 2001,China has introduced a variety of capital market opening measures,such as QFII,QDII,SH/SZ-HK Stock Connect,making China’s capital market increasingly internationalized.On this basis,in 2018,A-shares were included in the MSCI Emerging Markets Index for the first time,marking the high recognition of the achievements of China’s capital market construction and opening up by international capital markets and investors.Micro enterprises have also strengthened their vitality in the process of internationalization of the capital market and effectively improved the level of corporate governance and information environment.However,the impact of internationalization of the capital market on the long-standing financing difficulties and high financing costs of Chinese enterprises is gradually attracting attention from academia and the industry.Currently,research on the increasing internationalization of the capital market focuses more on proactive opening up measures,and rarely involves the impact of A-shares being included in the MSCI index.In addition,China’s enterprises still rely mainly on debt financing.Therefore,this article starts with the milestone event of the internationalization of the capital market,the inclusion of A-shares in the MSCI index,and explores the impact of capital market internationalization on the cost of corporate debt financing.This not only enriches the microeconomic effects of capital market internationalization,but also seeks a macro level solution to effectively reduce the cost of corporate debt financing,which has important theoretical and practical significance.In this paper,the inclusion of A-shares in the MSCI index is regarded as a quasi-natural experiment of the internationalization of the capital market.Based on the data of A-share listed companies from 2014 to 2021,the empirical test is carried out based on the multi-time point DID model,with a view to exploring the impact of the inclusion of A-shares in the MSCI index on the debt financing cost of the target company,and further analyzing the role path between the two and the difference of the effect under different conditions.Through empirical research,this article draws the following conclusions:(1)The inclusion of A-shares in the MSCI index effectively reduces the cost of corporate debt financing.This conclusion holds even after a series of robustness tests including endogeneity and exclusion of other policy effects.(2)The inclusion of A-shares in the MSCI index reduces corporate debt financing costs through information channels,reputation mechanisms,and internal governance channels.Companies included in the MSCI index have effectively improved the quality of information disclosure,corporate reputation,and internal governance.Creditors can obtain more high-quality information to understand the enterprise.Enterprises also continuously regulate their own business management behavior.In addition,positive reputation can effectively boost creditor confidence,reducing the cost of corporate debt financing.(3)The effect of A-shares included in the MSCI index on reducing corporate debt financing costs has been more effectively played in enterprises with higher financing constraints and lower corporate governance efficiency.Based on the above research conclusions,this article proposes various countermeasures and suggestions applicable to government departments and enterprises themselves to help enterprises fully reduce the cost of debt financing under the opportunity of internationalization of the capital market.The above research provides new empirical evidence for topics related to the internationalization of capital markets and the cost of debt financing,and lays the groundwork for further research on the interconnection of capital markets in the future.