Real estate market regulation and local government debt risk

Zeliang Xiao and Houli Zhang

Finance Research Letters, 2025, vol. 80, issue C

Abstract: China's real estate market regulations influence local government debt risk by altering fiscal conditions and government behavior. This paper uses an intensity difference-in-differences model with panel data from prefecture-level cities to assess the impact of stricter real estate policies since 2021. The findings show that these regulations have increased debt risk. The primary mechanism is the real estate market downturn that sharply reduces land-related fiscal revenue. In response, local governments have increased reliance on municipal investment bonds, further heightening debt risk.

Keywords: Real estate market regulation; Land finance; Local government debt risk (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612325006233
Full text for ScienceDirect subscribers only

Related works:
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:eee:finlet:v:80:y:2025:i:c:s1544612325006233

DOI: 10.1016/j.frl.2025.107362

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().