Local Government Debt and Corporate Price Markup:Theoretical Analysis and Empirical Evidence
Local government debt risk is a significant source of systemic financial risk in China,profoundly impact-ing both macroeconomic development and microeconomic entities.Based on data from A-share listed companies on the Shanghai and Shenzhen stock exchanges and municipal-level government debt data from 2008 to 2015,this paper dis-cusses the effects of local government debt on corporate price markup from both theoretical and empirical perspectives.The research findings illustrate that local government debt significantly reduces corporate price markup.Mechanism analysis reveals that increased corporate financing costs and labor costs are key transmission channels through which lo-cal government debt suppresses corporate price markup.Heterogeneity analysis shows that smaller companies,those with higher degrees of information asymmetry,and those with weaker cost-saving abilities,are more negatively affected by the expansion of local government debt on their price markup.Further research finds that local government debt sig-nificantly increases the dispersion of corporate price markups within a region,diminishing resource allocation efficiency.
Local Government debtCorporate Price MarkupFinance CostsLabor Cost
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NSTL
万方数据
