Abstract

Purpose – This paper explores the linkage of digital infrastructure to the cost of debt.

Design/methodology/approach – This study uses the implementation of the “Broadband China” policy that improves digital infrastructure as an exogenous shock and exploits the difference-in-differences method (DID).

Findings – Empirical analyses show that digital infrastructure leads to increased firms’ borrowing costs, which is robust to several robustness checks. In addition, we find that this unfavourable effect can be attributed to intensified market competition led by digital infrastructure construction. Cross-sectional analysis shows that this effect is greater for non-SOEs and smaller firms. Finally, we offer additional evidence of the unfavourable effect by showing that digital infrastructure construction leads to decreased fundamentals.

Originality/value – Our paper unveils how digital infrastructure construction affects firms’ business strategy in using private debts and extends the determinants of firms’ borrowing costs.

How long have you been doing your current job? Have you ever thought about trying a new profession? How difficult does change seem to you? The current rapid transformation of the labor market is putting many workers to the test: they struggle to keep up and move into new roles, while at the same time companies are having difficulty finding qualified personnel. A new study has analyzed the French labor market using methods from statistical physics, and found that over 90% of jobs today function as bottlenecks: they are easily accessible, but once entered, they become traps from which it is hard to move elsewhere—even when other opportunities are available.

The study, conducted by Max Knicker, Karl Naumann-Woleske, and Michael Benzaquen of École Polytechnique in Paris, and published in the Journal of Statistical Mechanics: Theory and Experiment (JSTAT), provides a detailed mapping of accessibility and transferability characteristics within the French occupational network. It reveals strong structural rigidity in the overall labor system and offers a basis for understanding what kinds of interventions and policy decisions might help to break this deadlock.