Land Assets, Urban Investment Bonds, and Local Governments' Debt Risk, China

Zhang, Juanfeng; Li, Lele; Yu, Ting; Gu, Jing; Wen, Haizhen

doi:10.3846/ijspm.2020.13834

Cited by 25 publications

(18 citation statements)

References 59 publications

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“…The interaction term LMR*PFC had a significant but negative impact on insolvency (−140.8758***) confirming a negative mediated moderation effect validating the findings of Hussain et al (2021). Previous literature including Zhang et al (2021), Joshi (2018) and Lee, Koh and Kang (2011) support the concept of having more tangible collaterals to have better control on risk of bankruptcy. A few researchers however, have also given evidence that support the risk increment due to non-productive fixed assets and/or poor utilization of fixed collaterals during loan acquistions (Psillaki et al, 2010).…”

Section: Main Empirical Findingsmentioning

confidence: 95%

Does Firm Growth Impede or Expedite Insolvency Risk? A Mediated Moderation Model of Leverage Maturity and Potential Fixed Collaterals

Wen¹,

Salameh²,

Hussain³

et al. 2022

Front. Environ. Sci.

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Business sustainability is compromised with an increase in insolvency risk. Firm growth is desirable, but it brings an associated bundle of high risks. We decomposed firm growth into internal and external growth and studied its impact on insolvency risk using a panel data set of 284 listed non-financial firms in Pakistan from 2013 to 2017. This study used the hierarchical multiple regression approach through panel corrected standard error (PCSE) and feasible generalized least squares estimators to test the proposed relationships. The results reveal that the leverage maturity ratio mediated the relationship between firm growth and insolvency risk. Moreover, we also collected fresh evidence on the moderating role of potential fixed collaterals that negatively moderated the relationship between leverage maturity and insolvency risk. It points toward the accumulation of non-productive fixed assets that create a burden for firms instead of helping them avail of favorable loan opportunities. The findings of this research suggests that fund managers should use more long term debt to tackle insolvency risk in highly volatile markets. Inclusion of assets that serve as better collaterals should be made part of the asset structure.

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Section: Main Empirical Findingsmentioning

confidence: 95%

Does Firm Growth Impede or Expedite Insolvency Risk? A Mediated Moderation Model of Leverage Maturity and Potential Fixed Collaterals

Wen¹,

Salameh²,

Hussain³

et al. 2022

Front. Environ. Sci.

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“…Use spread between CIB and treasury as the proxy variable for local government debt risk. CIB spread is used to represent local debt risks in much classical literature [53,54]. Although local governments can issue bonds by themselves after 2015, local government bonds are priced irrationally sometimes [55], and their liquidity is poor.…”

Section: The Influence Of Economic Fluctuation and Local Bond Risk On Ccb Risk-takingmentioning

confidence: 99%

Economic Fluctuation, Local Government Bond Risk and Risk-Taking of City Commercial Banks

Zheng

Chen

Dong³

2021

Sustainability

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Countercyclical fiscal regulation can mitigate economic risk, but this is bound to increase the scale of local government debt during an economic downturn, and then spread risk to the banking sector, forming potential financial instability factors. We extracted the three most important variables in this process: economic fluctuation, local debt risk and bank risk-taking to build an econometric model and found that: (1) both economic fluctuations and local government bond risks have a significant impact on bank risk-taking, which is negatively correlated with local economic growth, while the increase of local government bond risks tends to increase bank risk-taking in the long run; (2) the impact of local government debt risk significantly increases the loans of city commercial banks flowing into the construction industry. Therefore, the impact of local government bond risk on city commercial banks is concentrated in the impact on their construction loans. This study has an important reference value for timely and moderate countercyclical regulation, preventing local debt risk from spreading to banks, constructing a sustainable local government−bank ecology, and promoting sustainable economic development.

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“…The downturn of land and real estate market is a potential trigger for a local debt crisis (Baldacci et al, 2011;de Mendonça & Nunes, 2011;Homburg, 2014;. The land hoarding scale of local government exhibits a positive influence on the UIB scale and risk (Zhang et al, 2021). When the scale of land leasing increases, the area of land hoarding will be relatively reduced.…”

Section: Literature Reviewmentioning

confidence: 99%

Seven super urban agglomerations, governments’ debt risk, and land leasing, China

Zhang

et al. 2021

Growth and Change

Self Cite

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Land Assets, Urban Investment Bonds, and Local Governments' Debt Risk, China

Cited by 25 publications

References 59 publications

Does Firm Growth Impede or Expedite Insolvency Risk? A Mediated Moderation Model of Leverage Maturity and Potential Fixed Collaterals

Does Firm Growth Impede or Expedite Insolvency Risk? A Mediated Moderation Model of Leverage Maturity and Potential Fixed Collaterals

Economic Fluctuation, Local Government Bond Risk and Risk-Taking of City Commercial Banks

Seven super urban agglomerations, governments’ debt risk, and land leasing, China

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