Promotion pressures of local leaders and real estate investments: China and leader heterogeneity

Chinese local officials have strong incentives to stimulate economic growth in the pursuit of promotion. However, the connection between promotion pressure of local officials and investment in the real estate market has not been rigorously explored. By using the panel data of local leaders (municipa...

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Bibliographic Details
Published in:Journal of risk and financial management 2022-08, Vol.15 (8), p.1-14
Main Authors: Chen, Zhuo, Hu, Mingzhi, Qiu, Zhiyi
Format: Article
Language:English
Subjects:
China
Decentralization
Economic development
Economic growth
Economic reform
Federal government
Federalism
GDP
Gross Domestic Product
Hypotheses
Incentives
Intervention
Local economy
Local government
local officials
Political parties
promotion pressure
real estate investment
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Summary:Chinese local officials have strong incentives to stimulate economic growth in the pursuit of promotion. However, the connection between promotion pressure of local officials and investment in the real estate market has not been rigorously explored. By using the panel data of local leaders (municipal party secretaries or mayors) from 2002 to 2010, this paper investigates the correlations between local leaders' promotion pressures and growth in real estate investments. Empirical results show that local leaders' promotion pressures are significantly and positively correlated with the growth of the real estate market. Furthermore, the positive effect of promotion pressure on real estate development is significant if the leader is young or born locally, whereas this effect is insignificant if the leader is older or not a native. Our findings provide new evidence on how local leaders may strategically intervene in local economic activities.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm15080341