{"title":"Oil price volatility and corporate debt choice: Evidence from China","authors":"Yan Jiang , Tian Gan , Xiaokun Wei , Honghui Zou","doi":"10.1016/j.jcomm.2025.100517","DOIUrl":null,"url":null,"abstract":"<div><div>Crude oil is considered a vital energy source that significantly shapes firms' production, operation, investment and financing activities. This paper examines the association between oil price volatility (OPV) and corporate debt choice. Using a sample of Chinese listed firms from 2008 to 2022, we find that OPV can increase (decrease) reliance on bank debt (bond financing). This finding is consistent after conducting various robustness checks. Besides, this effect is greater for energy-related industries, less competitive industries, or non-stated-owned firms. Moreover, we find that this effect stems from increased information asymmetry and escalated financial distress risks. Finally, OPV arising from positive price fluctuations has a greater impact on debt choice than negative price changes. This study enhances the understanding of OPV's economic implications, emphasizing the need for policymakers to consider the macroeconomic context when evaluating firms' debt strategies.</div></div>","PeriodicalId":45111,"journal":{"name":"Journal of Commodity Markets","volume":"40 ","pages":"Article 100517"},"PeriodicalIF":4.5000,"publicationDate":"2025-09-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Commodity Markets","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S2405851325000613","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Crude oil is considered a vital energy source that significantly shapes firms' production, operation, investment and financing activities. This paper examines the association between oil price volatility (OPV) and corporate debt choice. Using a sample of Chinese listed firms from 2008 to 2022, we find that OPV can increase (decrease) reliance on bank debt (bond financing). This finding is consistent after conducting various robustness checks. Besides, this effect is greater for energy-related industries, less competitive industries, or non-stated-owned firms. Moreover, we find that this effect stems from increased information asymmetry and escalated financial distress risks. Finally, OPV arising from positive price fluctuations has a greater impact on debt choice than negative price changes. This study enhances the understanding of OPV's economic implications, emphasizing the need for policymakers to consider the macroeconomic context when evaluating firms' debt strategies.
期刊介绍:
The purpose of the journal is also to stimulate international dialog among academics, industry participants, traders, investors, and policymakers with mutual interests in commodity markets. The mandate for the journal is to present ongoing work within commodity economics and finance. Topics can be related to financialization of commodity markets; pricing, hedging, and risk analysis of commodity derivatives; risk premia in commodity markets; real option analysis for commodity project investment and production; portfolio allocation including commodities; forecasting in commodity markets; corporate finance for commodity-exposed corporations; econometric/statistical analysis of commodity markets; organization of commodity markets; regulation of commodity markets; local and global commodity trading; and commodity supply chains. Commodity markets in this context are energy markets (including renewables), metal markets, mineral markets, agricultural markets, livestock and fish markets, markets for weather derivatives, emission markets, shipping markets, water, and related markets. This interdisciplinary and trans-disciplinary journal will cover all commodity markets and is thus relevant for a broad audience. Commodity markets are not only of academic interest but also highly relevant for many practitioners, including asset managers, industrial managers, investment bankers, risk managers, and also policymakers in governments, central banks, and supranational institutions.