Research On The Impact Of Economic Policy Uncertainty On Corporate Default Risk

Economic policy uncertainty is an important source of external environment uncertainty faced by enterprises.Its impact on enterprise behavior also is a hot topic in the field of economics.At present,China's corporate debt default incidents constantly increase and corporate defaults will have a negative impact on society,so corporate debt have received widespread attention.Therefore,this paper selects from 2012 to 2017 the annual data of relevant economic variables to conduct an empirical study to examine the impact of the economic policy uncertainty on default risk.The results show that the high uncertainty of economic policy will lead to a significant increase in the risk of default.This paper also introduces two variables of corporate cash holding and financing constraints,and examines its impact on economic policy uncertainty and corporate default risk.It is found that the increase in financing constraints will strengthen the positive impact between the two variables,while cash holding is contrary to the hypothesis.Therefore,this paper conducts an extended analysis of the situation and finds that there is an optimal cash holding level that minimizes the default risk of the enterprise.When the enterprise's cash holding level exceeds the optimal level,the cash holding will be increased.Expand the risk of default of the company.Economic policy uncertainty affects corporate default risk mainly through direct influence on business operations,indirectly affecting corporate financing and other channels,including the two channels of corporate cash holding and financing constraints.The results of this study show that the uncertainty of economic policy will affect the business environment of the enterprise and ultimately lead to default risk.Increased policy uncertainty will worsen the corporate financing environment,reduce its refinancing ability,and narrow the external funding sources of enterprises.At the same time,uncertain factors will also affect the internal cash holdings of enterprises.This paper mainly from these two perspectives to study the impact of economic uncertainty on corporate default risk.