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The impact of local government financing vehicles debt on corporate risk-taking: Evidence from China

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  • Bao, Fengnai
  • Chen, Binger
  • Chen, Di

Abstract

Local government financing vehicles (LGFVs) significantly influence enterprise sustainability and growth. However, the extent to which LGFVs debt affects corporate risk-taking remains unclear. Utilizing data from A-share listed companies from 2010 to 2020, this study examines LGFVs debt's influence on corporate risk-taking and the modulatory effect of land transfer income. Findings indicate that LGFVs debt generally curtails corporate risk-taking, but this effect is moderated by land transfer income. Notably, the impact of LGFVs debt on risk-taking varies across enterprises, exerting a more pronounced effect on smaller firms than on larger ones.

Suggested Citation

  • Bao, Fengnai & Chen, Binger & Chen, Di, 2024. "The impact of local government financing vehicles debt on corporate risk-taking: Evidence from China," Finance Research Letters, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:finlet:v:60:y:2024:i:c:s1544612323013132
    DOI: 10.1016/j.frl.2023.104941
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    References listed on IDEAS

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    Cited by:

    1. Luo, Jie & Li, Jie, 2025. "How does local government debt governance affect corporate credit mismatches? Evidence from implementing the New Budget Law," Finance Research Letters, Elsevier, vol. 73(C).
    2. Cid-Aranda, Carlos & López-Iturriaga, Félix, 2025. "Control contestability, large shareholder identity, and corporate risk-taking: International evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 99(C).
    3. Li, Huijuan & Zhao, Yinfei & Wang, Yong, 2024. "Debt trap or innovation motivation? the impact of public debt on corporate substantive innovation: Evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 68(C).
    4. Wang, Kun & Chang, BinBin & Chen, Zuo & Wang, Kun, 2024. "Budget management legalization and its impact on land finance: Evidence from the implementation of the ‘New Budget Law’," Economics Letters, Elsevier, vol. 239(C).

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