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

Author

Listed:
  • Kong, Wei
  • Sharma, Susan Sunila
  • Zhao, Xin-Xin
  • Shi, Yao-Bo

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.

Suggested Citation

  • Kong, Wei & Sharma, Susan Sunila & Zhao, Xin-Xin & Shi, Yao-Bo, 2025. "The rescue effect of local government financing vehicles on real estate enterprises in China," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:pacfin:v:91:y:2025:i:c:s0927538x25000812
    DOI: 10.1016/j.pacfin.2025.102744
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