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Impact of economic policy uncertainty on China's urban construction investment bond financing costs

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  • Chen, Juan
  • Liu, Chenyan
  • Jin, Daxiang
  • Xiao, Zuoping

Abstract

This study empirically investigates how economic policy uncertainty (EPU) affects China's urban construction investment (UCI) bond financing costs, revealing a positive relationship. Moreover, UCI corporations operating in regions with higher marketization face lower bond financing costs, and are better equipped to mitigate the adverse effects of EPU on UCI bond financing costs. Conversely, increases in the degree of dependence on land finance increase UCI bond financing costs and exacerbate the adverse effect of EPU on these costs. Further analysis reveals that local government debt levels and land prices are channels through which EPU affects UCI bond financing costs.

Suggested Citation

  • Chen, Juan & Liu, Chenyan & Jin, Daxiang & Xiao, Zuoping, 2025. "Impact of economic policy uncertainty on China's urban construction investment bond financing costs," International Review of Financial Analysis, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:finana:v:100:y:2025:i:c:s1057521925000663
    DOI: 10.1016/j.irfa.2025.103979
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    More about this item

    Keywords

    Economic policy uncertainty; Urban construction investment bonds; Bond financing costs; Land finance; Marketization level;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing

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