Economic policy uncertainty and corporate bond credit spreads in China: insights from a system GMM approach on sustainable financial practices

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.