Impact of economic policy uncertainty on China's urban construction investment bond financing costs

Juan Chen, Chenyan Liu, Daxiang Jin and Zuoping Xiao

International Review of Financial Analysis, 2025, vol. 100, issue C

Abstract: This study empirically investigates how economic policy uncertainty (EPU) affects China's urban construction investment (UCI) bond financing costs, revealing a positive relationship. Moreover, UCI corporations operating in regions with higher marketization face lower bond financing costs, and are better equipped to mitigate the adverse effects of EPU on UCI bond financing costs. Conversely, increases in the degree of dependence on land finance increase UCI bond financing costs and exacerbate the adverse effect of EPU on these costs. Further analysis reveals that local government debt levels and land prices are channels through which EPU affects UCI bond financing costs.

Keywords: Economic policy uncertainty; Urban construction investment bonds; Bond financing costs; Land finance; Marketization level (search for similar items in EconPapers)
JEL-codes: G18 G30 H63 H74 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:100:y:2025:i:c:s1057521925000663

DOI: 10.1016/j.irfa.2025.103979

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