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Crowding in or crowding out? How local government debt influences corporate innovation for China

The pressure upon local governments to redeem their debt could affect government fiscal ability. It could consequently affect their fiscal policies on corporations, which might distort corporate innovation. Based on the data of Chinese Shanghai and Shenzhen A-share listed companies and the local gov...

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Detalles Bibliográficos
Autores principales: Xu, Junbing, Li, Yuanyuan, Feng, Dawei, Wu, Zhouyi, He, Yang
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Public Library of Science 2021
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8575287/
https://www.ncbi.nlm.nih.gov/pubmed/34748594
http://dx.doi.org/10.1371/journal.pone.0259452
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author Xu, Junbing
Li, Yuanyuan
Feng, Dawei
Wu, Zhouyi
He, Yang
author_facet Xu, Junbing
Li, Yuanyuan
Feng, Dawei
Wu, Zhouyi
He, Yang
author_sort Xu, Junbing
collection PubMed
description The pressure upon local governments to redeem their debt could affect government fiscal ability. It could consequently affect their fiscal policies on corporations, which might distort corporate innovation. Based on the data of Chinese Shanghai and Shenzhen A-share listed companies and the local government implicit short-term debt financed by local government financing vehicles (LGFVs) in 31 provinces, this paper shows that local government debt (LGD) negatively affects corporate R&D investment in China, thereby suggesting a strong crowding-out effect. The crowding-out effect is more pronounced when the firm is a non-state-owned enterprise (NSOE), the firm’s size is small, the firm’s age is young, or the firm is in the lower market competition. This paper provide evidence by interacting the terms that local government actions, such as consumption of fiscal resources, strengthening tax collection efforts, or consumption of credit resources, might partially account for the crowding-out effect. This study illustrates the innovation costs of local government debt.
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spelling pubmed-85752872021-11-09 Crowding in or crowding out? How local government debt influences corporate innovation for China Xu, Junbing Li, Yuanyuan Feng, Dawei Wu, Zhouyi He, Yang PLoS One Research Article The pressure upon local governments to redeem their debt could affect government fiscal ability. It could consequently affect their fiscal policies on corporations, which might distort corporate innovation. Based on the data of Chinese Shanghai and Shenzhen A-share listed companies and the local government implicit short-term debt financed by local government financing vehicles (LGFVs) in 31 provinces, this paper shows that local government debt (LGD) negatively affects corporate R&D investment in China, thereby suggesting a strong crowding-out effect. The crowding-out effect is more pronounced when the firm is a non-state-owned enterprise (NSOE), the firm’s size is small, the firm’s age is young, or the firm is in the lower market competition. This paper provide evidence by interacting the terms that local government actions, such as consumption of fiscal resources, strengthening tax collection efforts, or consumption of credit resources, might partially account for the crowding-out effect. This study illustrates the innovation costs of local government debt. Public Library of Science 2021-11-08 /pmc/articles/PMC8575287/ /pubmed/34748594 http://dx.doi.org/10.1371/journal.pone.0259452 Text en © 2021 Xu et al https://creativecommons.org/licenses/by/4.0/This is an open access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
spellingShingle Research Article
Xu, Junbing
Li, Yuanyuan
Feng, Dawei
Wu, Zhouyi
He, Yang
Crowding in or crowding out? How local government debt influences corporate innovation for China
title Crowding in or crowding out? How local government debt influences corporate innovation for China
title_full Crowding in or crowding out? How local government debt influences corporate innovation for China
title_fullStr Crowding in or crowding out? How local government debt influences corporate innovation for China
title_full_unstemmed Crowding in or crowding out? How local government debt influences corporate innovation for China
title_short Crowding in or crowding out? How local government debt influences corporate innovation for China
title_sort crowding in or crowding out? how local government debt influences corporate innovation for china
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8575287/
https://www.ncbi.nlm.nih.gov/pubmed/34748594
http://dx.doi.org/10.1371/journal.pone.0259452
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