Does funding sources’ regulation affect Chinese local governments’ financing behavior?

Yan Dong and Dingyuan Hu

Finance Research Letters, 2024, vol. 70, issue C

Abstract: In China, where urban investment and development companies (UIDCs) established by local governments have issued an excess of urban investment bonds (UIBs), the central government has sought to reduce risk in the UIB market. In empirical testing, we specifically examined how restrictions on UIDCs’ use of land revenues have affected the financing behaviors of local governments. Our results revealed that, following the restriction, the issuance of UIBs dropped, whereas the issuance of local bonds rose, which indicates that the regulation indeed improved local governments’ financing behaviors.

Keywords: Urban investment bond; Funding source regulation; Local bond (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:70:y:2024:i:c:s154461232401359x

DOI: 10.1016/j.frl.2024.106330

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