The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes

@article{Chen2020TheFO,
  title={The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes},
  author={Zhuo Chen and Zhiguo He and Chun Mei Liu},
  journal={Political Economy: National},
  year={2020}
}
Abstract The upsurge of shadow banking is typically driven by rising financing demand from certain real sectors. In China, the 4 trillion yuan stimulus package in 2009 was behind the rapid growth of shadow banking after 2012, expediting the development of Chinese corporate bond markets in the poststimulus period. Chinese local governments financed the stimulus through bank loans in 2009 and then resorted to nonbank debt financing after 2012 when faced with rollover pressure from bank debt… 
The Economics of Shadow Banking : Lessons from Surrogate Intermediaries in China ∗
The shadow banking sector has grown tremendously in China in the last decade, developing in parallel with the rise of non-bank lenders in western economies. Chinese non-financial firms supply credit
Shadow banking in China compared to other countries
China’s shadow banking has been rising rapidly in the last decade, mainly driven by regulations for banks, the Fiscal Stimulus Plan in 2008, and credit constraints in restrictive industries. This
Local Government Implicit Debt and Corporate R&D Activities:Evidence from Chinese Non-financial Listed Companies
Since the central government implemented the “four-trillion” fiscal stimulus plan in 2008, the implicit debt problem of local governments has increasingly become an important factor affecting
Optimal Shadow Banking
A puzzle of China’s shadow banking system is its stark growth since the 2008 Subprime Crisis, which is in sharp contrast to most of countries. We present a model to explain why the shadow banking
Finance Leases: A Hidden Channel of China’s Shadow Banking System
By analyzing a hand-collected transaction-level dataset on the finance leases of China’s public firms for the period 2007-2019, this paper sheds light on China’s financial leasing industry. We find
State-owned banks in credit stimulus: evidence from China
ABSTRACT This paper studies the role of the four largest, traditional, state-owned banks (Big Four SOBs) during China’s nationwide credit stimulus years (2009—10). We find that cities with a larger
Credit Allocation Under Economic Stimulus: Evidence from China
We study credit allocation across firms and its real effects during China’s economic stimulus plan of 2009–2010. We match confidential loan-level data from the nineteen largest Chinese banks with
Shanghai municipal investment corporation: Extending government power through financialization under state entrepreneurialism
Financialized urban governance means that local governments have been increasingly reliant on financial techniques and in some extreme cases, been captured by shareholders’ interests. However,
...
...

References

SHOWING 1-10 OF 170 REFERENCES
The Great Wall of Debt: Real Estate, Political Risk, and Chinese Local Government Financing Cost
Chengtou bonds -- urban construction and investment bonds, backed mostly by land sales, are the major source of financing for Chinese local governments. We find that one standard deviation increase
Public Debt and Private Firm Funding: Evidence from Chinese Cities
In China, local public debt issuance between 2006 and 2013 crowded out investment by private manufacturing firms by tightening their funding constraints, while it did not affect state-owned and
Subnational Debt of China: The Politics-Finance Nexus
Using unique proprietary loan-level data, we provide the first comprehensive study on China’s local government debt, which was off-balance sheet. Policy and commercial banks, both of which are state
Implicit Government Guarantee and the Pricing of Chinese LGFV Debt
Lacking the authority to raise debt on their own, Chinese local governments set up financing vehicles for urban construction and investment to issue the so-called chengtou bonds. While these bonds
Government Credit, a Double-Edged Sword: Evidence from the China Development Bank
Using proprietary data from the China Development Bank (CDB), this paper examines the effects of government credit on firm activities. Tracing the effects of government credit across different levels
Understanding the Risk of China's Local Government Debts and its Linkage with Property Markets
Unlike local governments in western countries, local Chinese governments are prevented from directly issuing debt to fund mandated capital projects. As a result of recent fiscal stresses and
Credit Allocation Under Economic Stimulus: Evidence from China
We study credit allocation across firms and its real effects during China’s economic stimulus plan of 2009–2010. We match confidential loan-level data from the nineteen largest Chinese banks with
Mapping Shadow Banking in China: Structure and Dynamics
We develop a stylised shadow banking map for China with the aim of providing a coherent picture of its structure and the associated financial system interlinkages. Five key characteristics emerge.
Neglected Part of Shadow Banking in China
  • P. An
  • Economics
    International Review of Economics & Finance
  • 2018
Abstract Guaranteed off-balance sheet (consists of banker's acceptance, letter of credit and letter of guarantee), is an essential part of China's shadow banking, but neglected by current research
In the Shadow of Banks: Wealth Management Products and Issuing Banks' Risks in China
We study the rise and risks in bank issuance of Wealth Management Products (WMPs), which are off-balance-sheet substitutes for deposits without the regulatory interest rate ceilings and constitute
...
...