Affiliation:
1. School of Business, Renmin University of China, Beijing 100872, China
2. School of Accounting, Capital University of Economics and Business, Beijing 100070, China
Abstract
Based on the perspective of investment and financing term structure, this study verifies that local government debt crowds out bank loans available to corporates, resulting in corporate maturity mismatch between investment and financing, namely, short-term financing for long-term investment. According to our heterogeneity analyses, the real impact of local government debt on maturity mismatch between investment and financing is more pronounced for non-state-owned enterprises and firms with high financing demand, located in cities with more local government debt and low financial development. Furthermore, our study reveals that local government debt and corporate maturity mismatch between investment and financing bring about underinvestment and default risk, which ultimately affects local sustainable economic development. This research contributes to the literature on Chinese-specific maturity mismatches.
Subject
Management, Monitoring, Policy and Law,Renewable Energy, Sustainability and the Environment,Geography, Planning and Development,Building and Construction
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