Work

Credit Risk Side of CSR: A New Angle for Building China’s Sustainable Cycle under the Reform of the Security Interest System

Year: 2025

Type: article

Abstract: Amid growing economic uncertainty and rising corporate default risks, effective legal reforms are essential for financial stability and sustainable business practices. This study examines the impact of China’s security interest system reform on corporate credit risk, highlighting its implications for corporate social responsibility (CSR) and sustainable development. Using a Difference-in-Differences approach and data from Chinese listed firms, the results show that the reform significantly reduces credit risk, particularly for asset-light, risk-averse, and growth-stage enterprises. Lower credit risk alleviates financing constraints, enabling firms to allocate more resources to Environmental, Social, and Governance (ESG) activities and long-term sustainability initiatives. The findings reveal that legal reforms in secured transactions not only serve as risk management tools but also function as institutional mechanisms that foster CSR engagement and contribute to building a sustainable economic cycle. This research fills a gap in linking legal system reform, credit risk mitigation, and CSR, offering practical insights for future policy design in sustainable finance and green innovation.

Source: Sustainability

DOI: 10.3390/su17209307

Authors: Lin Zou, Wanyi Chen

Institution: Xiangtan University

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: gold

Estimated APC paid: $2,896