Local officials’ sentiment and government financing cost: Evidence from Chengtou bonds in China

Zhaoyue Ren, Yang Xiong and Yongjian Huang

Finance Research Letters, 2024, vol. 63, issue C

Abstract: This study examines the relation between local officials’ sentiment and government financing cost. Utilizing the textual tone in government work reports to measure officials’ sentiment, we find that officials’ sentiment has a negative effect on yield spreads of Chengtou bonds issued by local government financial vehicles. This effect is more pronounced for issuers located in regions with more readable government work reports, issuers with a larger amount of bonds maturing, and bonds issued in the interbank market.

Keywords: Sentiment; Officials; Government financing cost; Implicit guarantee (search for similar items in EconPapers)
JEL-codes: G12 G28 H74 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003908

DOI: 10.1016/j.frl.2024.105360

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