Economics Seminar（2016-16）
Topic: Subnational Debt of China: The Politics-Finance Nexus*

Speaker: Dragon Yongjun Tang, The University of Hong Kong

Time: Tuesday, November 1, 14:00-15:30
Place: Room 217, Guanghua Building 2

Abstract:

Using unique proprietary loan-level data, we provide the first comprehensive study on China’s local government debt, which was off-balance sheet. Policy and commercial banks, both of which are state owned, are the main financiers of local governments. We find that notwithstanding their prevalent nonprofit goal of raising social welfare, policy loans perform remarkably better than commercial loans. Distressed local governments would choose to default on commercial bank loans but avoid default on policy bank loans, which are strategically more important for local politicians’ promotions. Our findings suggest that career concerns of politicians can serve as a discipline on government borrowers.                                  

Introduction:



Dragon Yongjun Tang is an Associate Professor of Finance at the University of Hong Kong. He received a Ph.D. degree in finance from the University of Texas at Austin in 2005. His research specialties are credit risk, credit ratings, credit derivatives, structured products, and Chinese banking and credit markets. His research papers have been published in, among others, the Journal of Finance, Journal of Financial Economics and Review of Financial Studies. He has also received numerous research awards and grants.

//www.sef.hku.hk/~yjtang/  

Your participation is warmly welcomed!