The rescue effect of local government financing vehicles on real estate enterprises in China

Wei Kong, Susan Sunila Sharma, Xin-Xin Zhao and Yao-Bo Shi

Pacific-Basin Finance Journal, 2025, vol. 91, issue C

Abstract: In recent years, the Chinese real estate market has undergone significant changes and challenges, leading the entire industry into a downturn cycle and facing multiple difficulties. Based on this, this study takes 32 prefecture-level and above cities in China as the research objects to study the rescue effect of LGFVs' land-underpinning behavior on the difficulties of real estate enterprises. The study finds: First, the real estate downward cycle has intensified land acquisition by LGFVs; Second, the land-underpinning behavior of LGFVs exerts a rescue effect on the difficulties of real estate enterprises; Third, the land-underpinning behavior of LGFVs through two methods to rescue real estate enterprises: strengthening cooperation with real estate enterprises and reducing land price fluctuations.

Keywords: Local government financing vehicles; Land-underpinning behavior; Real estate enterprises; Land acquisition (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:91:y:2025:i:c:s0927538x25000812

DOI: 10.1016/j.pacfin.2025.102744

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