Urban Development, Municipal Bonds and Official Promotion -- Evidence from Chinese Empirical Data

Authors: Ding LI*, Southwestern University of Finance and Economics, China, Junsong Ding, Fudan University, China
Topics: China, Development, Quantitative Methods
Keywords: Municipal Bonds, Official Promotion, Urban Development
Session Type: Paper
Day: 4/8/2020
Start / End Time: 4:55 PM / 6:10 PM
Room: Gold, Sheraton, IM Pei Tower, Majestic Level
Presentation File: No File Uploaded

The development status of a city is a comprehensive result of land use decision, investment accumulation, and local governance. From the perspective of China's practice, the tournament system promoted by officials is actually the main way for the central government to stimulate local officials to Change the face of the city. Due to China's special central land relationship and financial power distribution system, local officials pay special attention to the introduction of funds in urban development to make up for the reality of urban financial shortage. The main way to raise funds in early Chinese cities is land transfer, but the area available for land transfer is limited, and local financing channels are gradually transforming into financial methods such as bonds. This development model may have two outcomes. One is that the local government has obtained sufficient funds for urban development through empirical bonds, but it may also be that local leaders have squandered local development funds for promotion, face-to-face projects. Our empirical results show that local leaders who have made more use of municipal bonds in urban development have gained more promotion. The term of office of the municipal party committee secretary and local debt have shown a significant inverted U-shaped relationship, with the highest point appearing in 5.6 years, given China. The renewal period of about five years indicates that for the normal term of the party secretary, promotion incentives will significantly increase local debt.

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