Birds of a feather? Local gambling preferences and corporate debt maturity in China

Although debt maturity is central to firms’ operations, how informal institutions such as local gambling preferences shape it remains unclear. Using a sample of A-share listed firms from 2008 to 2023, this paper explores whether and how local gambling preferences shape corporate debt maturity in China. Results show that stronger local gambling preferences are significantly associated with shorter corporate debt maturity, suggesting that firms in such regions tend to receive debt financing with shorter maturities. This result remains robust across a series of sensitivity and endogeneity tests, including instrumental variable approaches, omitted variables test, lagged term of gambling preferences, entropy matching, and other robustness checks. In addition, this effect can be attributed to a deteriorated information environment, worse corporate governance, and greater speculative investment. Consistent with these findings, this effect is more pronounced in firms with smaller assets, more financing constraints and those located in regions with lower financial development. Our study contributes to the broader literature on debt maturity by highlighting how informal institutions and local cultural norms can shape corporate financing behaviour.