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Using a large sample of Chinese listed firms for the 2009–2024 period, this paper examines the impact of R&D investment on the cost of debt. We find that R&D investment reduces the cost of debt. The finding is robust to robustness tests and is prominent for firms located in regions with stronger government intervention, firms with higher default risk, and firms with lower information transparency. These findings differ from the traditional view that obtaining external credit financing is difficult for innovative firms, suggesting that institutional context plays a crucial role in shaping loan decisions.
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Wu et al. (2026) studied this question.
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