The Lease-debt Relationship of Chinese Local Government Financing Vehicles

Abstract

In recent years, the number of local government financing vehicles in China has been increasing, the scale of development has been expanding rapidly, and the financing methods used have also been increasing. At present, bank loans are still the main financing channels, but the financing lease mode has become one of the important ways for local government financing vehicles to obtain financial access. This paper mainly studies the lease-debt relationship of Chinese local government financing vehicles, and selects the unbalanced panel data of 1435 Chinese local government financing vehicles from 2012 to 2020 for empirical analysis. The empirical results show that the relationship between the lease ratio and the loan ratio is significantly negative, indicating that the lease-debt relationship of the local government financing platform in China is a substitution relationship. Increasing the use of lease financing will reduce the use of loan financing by the local government financing platform, while the control variable bond ratio, total assets, leverage ratio and cash ratio also have a significant impact on the lease ratio, Finally, based on the empirical results, this paper analyzes and puts forward corresponding suggestions.