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Local Government Debt, Real Estate Investment and Corporate Investment: Evidence from China

Author

Listed:
  • Ge Gao

    (School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China)

  • Jichang Dong

    (School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China
    Key Laboratory of Big Data Mining and Knowledge Management, Chinese Academy of Sciences, Beijing 100190, China)

  • Xiuting Li

    (School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China
    Key Laboratory of Big Data Mining and Knowledge Management, Chinese Academy of Sciences, Beijing 100190, China)

Abstract

This paper examines the effect of local government debt (LGD) and real estate investment on corporate investment. It finds that the increase in LGD and real estate investment leads to a decline in corporate investment and that the crowding-out effect is mitigated by the interaction of LGD and real estate investment. The effects are channeled by raising corporate costs and reducing corporate financing. This impact is more pronounced for firms in eastern regions and nonresource-based cities, large and private firms.

Suggested Citation

  • Ge Gao & Jichang Dong & Xiuting Li, 2022. "Local Government Debt, Real Estate Investment and Corporate Investment: Evidence from China," Sustainability, MDPI, vol. 14(19), pages 1-21, September.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:19:p:12353-:d:928027
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    References listed on IDEAS

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    2. Hai Xie & Weikun Zhang & Hanyuan Liang, 2023. "Can Local Government Debt Decrease the Pollution Emission of Enterprises?—Evidence from China’s Industrial Enterprises," Sustainability, MDPI, vol. 15(11), pages 1-20, June.
    3. Qingyi Chen & Qinglan Qian & Zuolin Yao & Na Yang & Junyue Tong & Yujiao Wang, 2022. "Global–Local Knowledge Spillover Strategic Coupling Network: Biopharmaceutical Industry Study of GBA, China," Sustainability, MDPI, vol. 14(21), pages 1-17, November.

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