Digital Transformation and Corporate Debt Financing Costs: Evidence from China

The digital economy is reshaping the traditional economic and social mode of operation in today’s era, with digital technology as the key driving force. Digital transformation has become a widely recognized development direction for enterprises to keep up with, as the digital economy and the real economy have become deeply integrated. Financing activities, as key drivers of enterprise operations, are naturally affected by the digital transformation process. Starting from the unique perspective of financing, this paper thoroughly explores the potential impact of enterprise digital transformation on the cost of debt financing through empirical analysis. In the variable measurement stage, data mining and text analysis techniques are innovatively applied to accurately quantify the level of corporate digital transformation. The analysis reveals a strong inverse relationship between a company’s digital transformation efforts and its debt financing expenses—meaning that as firms become more digitalized, their borrowing costs tend to decrease. Moreover, this effect shows significant differences among enterprises with different industry backgrounds.