Influence Factors of Land Finance in China:An Empirical Research of Panel Data from Municipal-Level Cities in China

Abstract

Land finance has become one of the most important issues in government management and it is drawing wide attention in all social sectors.Local government' s marvelous growing rely on the land finance is significantly affecting our national economic and social development.Looking for the reason why the local governments excessive rely on the land finance is the present focus of theoretical research and management practice,but the debate on factors of land finance is still unsolved.The existed research on the influencing factors of the implementation of land finance is still not systematic,it needs theoretical frame to analyze and verify.The discussion is even rare in the view of soft budget constrain.Based on the view of soft budget constrain,this paper construct a systematic frame of a local government' s influencing factors,and then explain the mechanism of the implementation of local government' s finance.The practical value of this paper is that it identifies the key decisive factors of local government' s relying on the land finance,and then it offers the experience for better understanding of land finance behavior of local government and improving the relative government institution.Based on the soft budget constraint theory,and starting from fiscal decentralization system and official promotion system,this paper constructs a systematic theory model of influence factors including fiscal decentralization,political promotion and social development factors.It analysis the affecting relationship of fiscal revenue decentralization,fiscal expenditure decentralization,financial self-supply ability,fiscal dependents,official promotion competition,official characteristics,economic development level,urbanization level,industrial structure and land area on land finance.This paper empirically examines the influence factors of land finance in china,using panel data from257 municipal-level governments(form 2003—2007).The main conclusion and innovative points basically shows in the following three aspects;Firsdy,based on the traditional fiscal decentralization theory,this paper discusses the effect of financial revenue and expenditure on land finance.And meanwhile the concept of financial self-supply ability and fiscal dependents are introduced to discuss the effect of policy burden on land finance.Empirical study shows that a notable positive relationship exists between the fiscal expenditure decentralization and land finance.And also shows that there is a negatively relationship between fiscal revenue decentralization and land finance.Except for this,this paper also shows that there is a positively relationship between self-supply ability and land finance.Secondly,based on the promotion tournament theory,and started with the view of promotion competition of the local official,this paper analyzes the effect of promotion competition and official characteristics on land finance.The results show that there is no notable relationship between the promotion competition and land finance.But the official ' s age has a negatively effect on land finance,and official' s tenure has inverse U-shape effect on land finance.Thirdly,this paper also analyzes the effect of the other social development factors on land finance.It finds that economic development level,urbanization level,industrial structure and land area all have a positively affect on local governmental land finance.The value of this research is that it broadens and develops the application of soft budget constrain theory in China local government,it even provides a new dieoretical view for land finance,also it enriches the research of the land finance of local government.The practical value of this paper is that it identifies the key decisive factors of local government' s relying on the land finance.And then it offers the experience for better understanding of land finance behavior of local government and improving the relative government institution.