Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China

Hongdan Ji

doi:doi:10.11648/j.eco.20200904.12

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Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China

Hongdan Ji

Published in Economics (Volume 9, Issue 4)

Received: 15 November 2020 Accepted: 26 November 2020 Published: 4 December 2020

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Abstract

The pilot policy of revenue bonds for special project implemented in June 2017 is essentially a transition from "packaged issuance" to "unpacked issuance", which has improved the information accuracy in terms of identifying municipal and county local governments in China. In order to examine the impact of information accuracy on the coupon rate of local government special bonds, this paper regards the pilot policy as a quasi-natural experiment and conducts an empirical study by using the propensity score matching method. The empirical conclusions show that the increased accuracy of information due to the pilot policy has significantly increased the coupon rate of China’s local government special bonds. However, increasing the information accuracy blindly may trigger the "Matthew Effect" and increase the financing costs of local governments continuously, which is not conducive to the sustainable development of China’s local government special bonds. Therefore, it is necessary to strengthen the management of optimal information accuracy and increase the intensity of information disclosure, so as to realize the financing restriction mechanism of China’s local government special bonds market under the balance of the interests between market entities and the government.

Published in	Economics (Volume 9, Issue 4)
DOI	10.11648/j.eco.20200904.12
Page(s)	79-85
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Local Government Special Bonds, Information Asymmetry, Information Accuracy, Information Disclosure

References

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[2]	Wang, Z. G. (2015). Optimal supervision contract of local government issuing bonds by themselves under the condition of hiding information [J]. Economic Perspectives, 4: 51-58.
[3]	Yin, Q. H. and Chen, Z. B. (2018). Study on optimal allocation of issuance amount of local government bonds [J]. Chinese Journal of management science, 1: 90-97.
[4]	Liu G. (2015). Relationships between financial advisors, issuers, and underwriters and the pricing of municipal bonds. SSRN Electronic Journal.
[5]	Demarzo P M. (2005). The pooling and tranching of securities：a model of informed intermediation. The Review of Financial Studies, 18 (1): 1-35.
[6]	Coval J, Jurek J, and Stafford E. (2009). The economics of structured finance. Journal of Economic Perspectives, 23 (1): 3-26.
[7]	Wang, Y. Q., Dai, Y. and Bao, T. (2015). The design of local government bonds system under federalism: centralized vs. decentralized issuance and optimal transparency. Economic Research Journal, 11: 65-78.
[8]	Liu, L. Z. and Jiang, X. W. (2019). Does accuracy of information affect coupon rate and liquidity of local government bond? —— Analysis based on the pilot policy of special bond innovation [J]. Collected Essays on Finance and Economics, 10: 33-43.
[9]	Fairchild L M, Koch T W. (1998). The Impact of State disclosure requirements on municipal yields. National Tax Journal, 51 (4): 733-753.
[10]	Schultz P. (2012). The market for new issues of municipal bonds: the roles of transparency and limited access to retail investors. Journal of Financial Economics, 106 (3): 492-512.
[11]	Zhou, Y. M. (2018). Fiscal transparency, credit rating and local government bond financing cost [J]. Journal of Jiangxi University of Finance and Economics, 1: 41-49.
[12]	Wang, C. J. and Cui, F. (2020). Can information disclosure restrain local governments' leveraging behavior? -- Empirical analysis based on China prefecture-level panel data [J]. Journal of Shandong University of Finance and Economics, 1: 97-108.
[13]	Andersen, A. L., D. D. Lassen, and L. H. W. Nielsen. (2014). The impact of late budgets on state government borrowing costs. Journal of Public Economics, 109: 27-35.
[14]	Wang, M., & Fang, Z. (2018). The Influencing factors of issuance cost on municipal bonds in China —— An empirical analysis on 3194 issued municipal bonds in 2015-2017 [J]. Public Finance Research, 12, 35-47.
[15]	He, D. (2018). An analysis of influential factors of credit price gap of municipal bonds in China [J]. Journal of Hehai university (philosophy and social sciences edition), 2018 (2).
[16]	Abadie A, Imbens G W. (2006). Large sample properties of matching estimators for average treatment effects. Econometrica, 74 (1): 235-267.
[17]	Chen, Q. (2014). Advanced econometrics and stata application [M]. Beijing: Higher Education Press.

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Hongdan Ji. (2020). Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China. Economics, 9(4), 79-85. https://doi.org/10.11648/j.eco.20200904.12

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Hongdan Ji. Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China. Economics. 2020, 9(4), 79-85. doi: 10.11648/j.eco.20200904.12

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Hongdan Ji. Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China. Economics. 2020;9(4):79-85. doi: 10.11648/j.eco.20200904.12

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@article{10.11648/j.eco.20200904.12,
  author = {Hongdan Ji},
  title = {Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China},
  journal = {Economics},
  volume = {9},
  number = {4},
  pages = {79-85},
  doi = {10.11648/j.eco.20200904.12},
  url = {https://doi.org/10.11648/j.eco.20200904.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20200904.12},
  abstract = {The pilot policy of revenue bonds for special project implemented in June 2017 is essentially a transition from "packaged issuance" to "unpacked issuance", which has improved the information accuracy in terms of identifying municipal and county local governments in China. In order to examine the impact of information accuracy on the coupon rate of local government special bonds, this paper regards the pilot policy as a quasi-natural experiment and conducts an empirical study by using the propensity score matching method. The empirical conclusions show that the increased accuracy of information due to the pilot policy has significantly increased the coupon rate of China’s local government special bonds. However, increasing the information accuracy blindly may trigger the "Matthew Effect" and increase the financing costs of local governments continuously, which is not conducive to the sustainable development of China’s local government special bonds. Therefore, it is necessary to strengthen the management of optimal information accuracy and increase the intensity of information disclosure, so as to realize the financing restriction mechanism of China’s local government special bonds market under the balance of the interests between market entities and the government.},
 year = {2020}
}

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TY  - JOUR
T1  - Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China
AU  - Hongdan Ji
Y1  - 2020/12/04
PY  - 2020
N1  - https://doi.org/10.11648/j.eco.20200904.12
DO  - 10.11648/j.eco.20200904.12
T2  - Economics
JF  - Economics
JO  - Economics
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EP  - 85
PB  - Science Publishing Group
SN  - 2376-6603
UR  - https://doi.org/10.11648/j.eco.20200904.12
AB  - The pilot policy of revenue bonds for special project implemented in June 2017 is essentially a transition from "packaged issuance" to "unpacked issuance", which has improved the information accuracy in terms of identifying municipal and county local governments in China. In order to examine the impact of information accuracy on the coupon rate of local government special bonds, this paper regards the pilot policy as a quasi-natural experiment and conducts an empirical study by using the propensity score matching method. The empirical conclusions show that the increased accuracy of information due to the pilot policy has significantly increased the coupon rate of China’s local government special bonds. However, increasing the information accuracy blindly may trigger the "Matthew Effect" and increase the financing costs of local governments continuously, which is not conducive to the sustainable development of China’s local government special bonds. Therefore, it is necessary to strengthen the management of optimal information accuracy and increase the intensity of information disclosure, so as to realize the financing restriction mechanism of China’s local government special bonds market under the balance of the interests between market entities and the government.
VL  - 9
IS  - 4
ER  -

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Author Information

Hongdan Ji

School of Public Finance and Taxation, Central University of Finance and Economics, Beijing, China

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APA Style

Hongdan Ji. (2020). Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China. Economics, 9(4), 79-85. https://doi.org/10.11648/j.eco.20200904.12

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ACS Style

Hongdan Ji. Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China. Economics. 2020, 9(4), 79-85. doi: 10.11648/j.eco.20200904.12

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AMA Style

Hongdan Ji. Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China. Economics. 2020;9(4):79-85. doi: 10.11648/j.eco.20200904.12

Copy | Download

@article{10.11648/j.eco.20200904.12,
  author = {Hongdan Ji},
  title = {Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China},
  journal = {Economics},
  volume = {9},
  number = {4},
  pages = {79-85},
  doi = {10.11648/j.eco.20200904.12},
  url = {https://doi.org/10.11648/j.eco.20200904.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20200904.12},
  abstract = {The pilot policy of revenue bonds for special project implemented in June 2017 is essentially a transition from "packaged issuance" to "unpacked issuance", which has improved the information accuracy in terms of identifying municipal and county local governments in China. In order to examine the impact of information accuracy on the coupon rate of local government special bonds, this paper regards the pilot policy as a quasi-natural experiment and conducts an empirical study by using the propensity score matching method. The empirical conclusions show that the increased accuracy of information due to the pilot policy has significantly increased the coupon rate of China’s local government special bonds. However, increasing the information accuracy blindly may trigger the "Matthew Effect" and increase the financing costs of local governments continuously, which is not conducive to the sustainable development of China’s local government special bonds. Therefore, it is necessary to strengthen the management of optimal information accuracy and increase the intensity of information disclosure, so as to realize the financing restriction mechanism of China’s local government special bonds market under the balance of the interests between market entities and the government.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Research on the Influence of Information Accuracy on the Coupon Rate of Local Government Special Bonds in China
AU  - Hongdan Ji
Y1  - 2020/12/04
PY  - 2020
N1  - https://doi.org/10.11648/j.eco.20200904.12
DO  - 10.11648/j.eco.20200904.12
T2  - Economics
JF  - Economics
JO  - Economics
SP  - 79
EP  - 85
PB  - Science Publishing Group
SN  - 2376-6603
UR  - https://doi.org/10.11648/j.eco.20200904.12
AB  - The pilot policy of revenue bonds for special project implemented in June 2017 is essentially a transition from "packaged issuance" to "unpacked issuance", which has improved the information accuracy in terms of identifying municipal and county local governments in China. In order to examine the impact of information accuracy on the coupon rate of local government special bonds, this paper regards the pilot policy as a quasi-natural experiment and conducts an empirical study by using the propensity score matching method. The empirical conclusions show that the increased accuracy of information due to the pilot policy has significantly increased the coupon rate of China’s local government special bonds. However, increasing the information accuracy blindly may trigger the "Matthew Effect" and increase the financing costs of local governments continuously, which is not conducive to the sustainable development of China’s local government special bonds. Therefore, it is necessary to strengthen the management of optimal information accuracy and increase the intensity of information disclosure, so as to realize the financing restriction mechanism of China’s local government special bonds market under the balance of the interests between market entities and the government.
VL  - 9
IS  - 4
ER  -

Copy | Download