Law-Based Data Governance, Corporate Digitalization, and Credit Cost Premiums

Using the implementation of the Data Security Law as a quasi-natural experiment and panel data on Chinese listed firms, this paper constructs a generalized difference-in-differences model to examine the effect of law-based data governance on corporate credit cost premiums. The results show that, following the implementation of the Data Security Law, firms with higher pre-policy digitalization levels experience a significant increase in credit cost premiums, and this effect exhibits both lagged and cumulative patterns. Increased operating revenue volatility, greater profitability pressure, and deteriorating overall financial risk constitute important transmission channels. Firms’ internal digital governance capabilities mitigate this financing effect, whereas stronger bank bargaining power amplifies it. Law-based data governance also leads highly digitalized firms to experience a contraction in loan size, a decline in the share of long-term loans, and an increase in the share of short-term loans. These findings demonstrate that law-based data governance reshapes credit resource allocation through bank risk pricing. Regulators, financial institutions, and firms should strengthen their capabilities to identify and manage data-related risks while safeguarding data security, thereby alleviating the financing pressures associated with corporate digitalization.