A new study released by the World Bank Group offers one of the most extensive analyses ever conducted on corporate borrowing costs across developing economies, revealing how reducing financing expenses can significantly strengthen businesses, encourage investment, and create millions of jobs. Drawing on decades of financial data from countries around the world, the report provides policymakers and business leaders with practical recommendations for improving access to affordable capital and accelerating economic development.

The research examines more than 300,000 corporate bond issuances by approximately 50,000 companies across 138 countries over the past 35 years, making it one of the largest international studies of its kind. By comparing borrowing patterns across economies, the report identifies why firms in low- and middle-income countries often pay considerably higher financing costs than companies operating in advanced economies.

According to the study, access to affordable financing is essential for business expansion. Companies depend on external funding to invest in new technologies, increase production capacity, develop innovative products, modernize equipment, and hire additional workers. When borrowing costs remain excessively high, businesses postpone investments, reduce expansion plans, and limit job creation, slowing overall economic growth.

One of the report’s key findings is that stronger domestic bond markets can play a transformative role in reducing borrowing costs. Efficient capital markets provide companies with alternatives to traditional bank loans, increase competition among lenders, and enable firms to raise long-term financing under more favorable conditions. This allows businesses to better manage investment projects while reducing financial risks associated with short-term borrowing.

The World Bank Group notes that governments can improve corporate financing conditions through a combination of sound macroeconomic policies, transparent financial regulations, stronger legal protections for investors, and deeper local capital markets. Stable inflation, predictable monetary policy, and reliable financial institutions help reduce investor uncertainty, which ultimately lowers the interest rates businesses must pay when raising capital.

The study also highlights the importance of developing local currency bond markets. Heavy dependence on foreign currency borrowing exposes firms to exchange-rate volatility, increasing debt burdens whenever domestic currencies weaken. Expanding local currency financing can help companies reduce these risks while strengthening overall financial stability. Recent trends suggest many emerging-market firms have already begun shifting toward domestic currency borrowing as a way to improve resilience against global interest-rate fluctuations.

Lower financing costs have implications that extend beyond individual businesses. Easier access to affordable capital enables firms to expand operations, increase productivity, adopt modern technologies, and hire more employees. As companies grow, they contribute to higher incomes, stronger exports, increased tax revenues, and broader economic development, creating a positive cycle of investment and employment.

However, the report emphasizes that borrowing costs remain significantly higher in many developing economies because investors often face greater uncertainty regarding economic stability, legal enforcement, political risk, and market liquidity. Addressing these structural challenges requires long-term reforms that improve confidence in financial systems and encourage greater participation from domestic and international investors.

The findings arrive at a time when many developing countries continue to navigate higher global interest rates and tighter financial conditions. Access to affordable financing has become increasingly important as governments and private companies seek to sustain investment, boost productivity, and generate employment despite global economic uncertainty.

The report concludes that reducing corporate borrowing costs is not simply a financial objective but a broader development strategy. By strengthening capital markets, improving financial transparency, and expanding access to long-term financing, developing economies can empower businesses to invest with greater confidence, stimulate innovation, and create the jobs needed to support sustainable and inclusive economic growth in the years ahead.

For readers interested in exploring the full findings, the report is available here: .