The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes

Zhuo Chen, Zhiguo He () and Chun Liu ()

No 23598, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: China’s four-trillion-yuan stimulus package fueled by bank loans in 2009 has led to the rapid growth of shadow banking activities after 2012. Local governments financed the stimulus through bank loans in 2009, and resorted to non-bank debt financing after 2012 given the rollover pressure from bank debt coming due, a manifestation of the stimulus-loan-hangover effect. Cross-sectionally, provinces with greater bank loan growth in 2009 experienced more Municipal Corporate Bonds issuance during 2012-2015, together with more shadow banking activities including Entrusted loans and Wealth Management Products. We highlight the market forces behind the regulation changes on local government debt post 2012.

JEL-codes: F62 F63 G23 O16 O17 O53 (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-ban, nep-cna and nep-tra
Note: CF DEV EFG IFM POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

Published as Zhuo Chen & Zhiguo He & Chun Liu, 2020. "The financing of local government in China: Stimulus loan wanes and shadow banking waxes," Journal of Financial Economics, .

Downloads: (external link)
http://www.nber.org/papers/w23598.pdf (application/pdf)

Related works:
Journal Article: The financing of local government in China: Stimulus loan wanes and shadow banking waxes (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:23598

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w23598

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().