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High‐Speed Rail Service and the Issuance of Municipal Corporate Bonds

Liansheng Zheng, Juncheng Li and Zhihua Zhao

China & World Economy, 2022, vol. 30, issue 4, 230-254

Abstract: This study uses the difference‐in‐differences method to test the impact of a high‐speed rail (HSR) service on the issuance of municipal corporate bonds (MCB) based on panel data for prefecture‐level cities in China from 2003 to 2016. The study has three findings. First, HSR increased the scale of the issuance of MCB significantly. After conducting a series of robustness tests, the above conclusion remained robust. Second, HSR affected the issuance of MCB by increasing the city's financing demands and improving the c ity's financing capacity. Third, the effect of HSR on the issuance of MCB varied from city to city. Specifically, the promotion of the opening of HSR to the issuance of MCB was concentrated in remote and fast growing cities. High‐speed rail can also effectively reduce the cost and shrink credit spreads of the MCB. This paper shows that it is necessary to further optimize the layout of HSR, release and exploit the financial resource reallocation effect of HSR, and provide financial support to the high‐quality development of cities.

Date: 2022
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