Central bank digital currency and stock price crash risk: Evidence from China's digital yuan (e-CNY) pilot

Yan Han; Zifang Chen; Xing Liu; Kedi Wang

doi:10.1016/j.frl.2026.109857

Central bank digital currency and stock price crash risk: Evidence from China's digital yuan (e-CNY) pilot

Yan Han
, Zifang Chen
, Xing Liu
, Kedi Wang^*

^*Corresponding author for this work

Beijing Institute of Technology

Research output: Contribution to journal › Article › peer-review

Abstract

Using the staggered rollout of China's digital yuan (e-CNY) pilot, we examine whether central bank digital currency (CBDC) adoption affects firm-level stock price crash risk. A staggered difference-in-differences analysis of Chinese A-share listed firms from 2018 to 2024 shows that firms in pilot cities experience a significant decline in subsequent crash risk. The effect is stronger among firms with higher information opacity and weaker governance. Mechanism tests reveal that treated firms exhibit lower discretionary accruals and fewer financial restatements, consistent with improved corporate transparency. The results suggest that CBDC transaction traceability enhances external monitoring and discourages managerial bad-news hoarding. Our findings provide novel evidence that digital payment infrastructure can generate governance spillovers and improve capital-market stability.

Original language	English
Article number	109857
Journal	Finance Research Letters
Volume	98
DOIs	https://doi.org/10.1016/j.frl.2026.109857
Publication status	Published - 1 Jun 2026
Externally published	Yes

Keywords

Central bank digital currency
External monitoring
Information transparency
Stock price crash risk
e-CNY

Access to Document

10.1016/j.frl.2026.109857

Cite this

@article{8fa8bc2f47b5422a8328c5993968f424,

title = "Central bank digital currency and stock price crash risk: Evidence from China's digital yuan (e-CNY) pilot",

abstract = "Using the staggered rollout of China's digital yuan (e-CNY) pilot, we examine whether central bank digital currency (CBDC) adoption affects firm-level stock price crash risk. A staggered difference-in-differences analysis of Chinese A-share listed firms from 2018 to 2024 shows that firms in pilot cities experience a significant decline in subsequent crash risk. The effect is stronger among firms with higher information opacity and weaker governance. Mechanism tests reveal that treated firms exhibit lower discretionary accruals and fewer financial restatements, consistent with improved corporate transparency. The results suggest that CBDC transaction traceability enhances external monitoring and discourages managerial bad-news hoarding. Our findings provide novel evidence that digital payment infrastructure can generate governance spillovers and improve capital-market stability.",

keywords = "Central bank digital currency, External monitoring, Information transparency, Stock price crash risk, e-CNY",

author = "Yan Han and Zifang Chen and Xing Liu and Kedi Wang",

note = "Publisher Copyright: {\textcopyright} 2026 Elsevier Inc.",

year = "2026",

month = jun,

day = "1",

doi = "10.1016/j.frl.2026.109857",

language = "English",

volume = "98",

journal = "Finance Research Letters",

issn = "1544-6123",

publisher = "Elsevier Ltd.",

}

TY - JOUR

T1 - Central bank digital currency and stock price crash risk

T2 - Evidence from China's digital yuan (e-CNY) pilot

AU - Han, Yan

AU - Chen, Zifang

AU - Liu, Xing

AU - Wang, Kedi

PY - 2026/6/1

Y1 - 2026/6/1

N2 - Using the staggered rollout of China's digital yuan (e-CNY) pilot, we examine whether central bank digital currency (CBDC) adoption affects firm-level stock price crash risk. A staggered difference-in-differences analysis of Chinese A-share listed firms from 2018 to 2024 shows that firms in pilot cities experience a significant decline in subsequent crash risk. The effect is stronger among firms with higher information opacity and weaker governance. Mechanism tests reveal that treated firms exhibit lower discretionary accruals and fewer financial restatements, consistent with improved corporate transparency. The results suggest that CBDC transaction traceability enhances external monitoring and discourages managerial bad-news hoarding. Our findings provide novel evidence that digital payment infrastructure can generate governance spillovers and improve capital-market stability.

AB - Using the staggered rollout of China's digital yuan (e-CNY) pilot, we examine whether central bank digital currency (CBDC) adoption affects firm-level stock price crash risk. A staggered difference-in-differences analysis of Chinese A-share listed firms from 2018 to 2024 shows that firms in pilot cities experience a significant decline in subsequent crash risk. The effect is stronger among firms with higher information opacity and weaker governance. Mechanism tests reveal that treated firms exhibit lower discretionary accruals and fewer financial restatements, consistent with improved corporate transparency. The results suggest that CBDC transaction traceability enhances external monitoring and discourages managerial bad-news hoarding. Our findings provide novel evidence that digital payment infrastructure can generate governance spillovers and improve capital-market stability.

KW - Central bank digital currency

KW - External monitoring

KW - Information transparency

KW - Stock price crash risk

KW - e-CNY

UR - https://www.scopus.com/pages/publications/105037639574

U2 - 10.1016/j.frl.2026.109857

DO - 10.1016/j.frl.2026.109857

M3 - Article

AN - SCOPUS:105037639574

SN - 1544-6123

VL - 98

JO - Finance Research Letters

JF - Finance Research Letters

M1 - 109857

ER -

Central bank digital currency and stock price crash risk: Evidence from China's digital yuan (e-CNY) pilot

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this