The impacts of political uncertainty on public financing costs evidence from anti-corruption investigations in China Haoyu Gao, Fukang Chen, Yiling Ouyang
By: Gao, Haoyu
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Contributor(s): Chen, Fukang | Ouyang, Yiling.
Material type: 
ArticleSubject(s): HACIENDAS LOCALES | POLITICAS PUBLICAS | INCERTIDUMBRE | CORRUPCION | CHINA
In:
Public Choice v. 198, n. 1-2, January 2024, p. 69-91Summary: Our study investigates the impact of local political uncertainty on public financing costs in China. By examining a series of unexpected turnovers of municipal government leaders, we find that the offering yield spreads of municipal corporate bonds increase by around 23 basis points shortly following an anti-corruption investigation and reverse afterward. Indicators show that the anti-corruption investigation escalates the short-term uncertainty about government actions. The pricing effect is stronger for issuers with higher exposure to government policies or lower financial resilience. A transparent information environment alleviates the impact. In contrast, temporary government inefficiency does not explain the increase in yield spreads. Our findings suggest that political uncertainty is a determinant of public financing costs.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 1443/2024/1/2-3 (Browse shelf) | Available | OP 1443/2024/1/2-3 |
Resumen.
Bibliografía.
Our study investigates the impact of local political uncertainty on public financing costs in China. By examining a series of unexpected turnovers of municipal government leaders, we find that the offering yield spreads of municipal corporate bonds increase by around 23 basis points shortly following an anti-corruption investigation and reverse afterward. Indicators show that the anti-corruption investigation escalates the short-term uncertainty about government actions. The pricing effect is stronger for issuers with higher exposure to government policies or lower financial resilience. A transparent information environment alleviates the impact. In contrast, temporary government inefficiency does not explain the increase in yield spreads. Our findings suggest that political uncertainty is a determinant of public financing costs.
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