The "Land Finance" In Yangtze River Delta And Local Financial Innovation

China’s real estate market and the urbanization process boomed after entering the21st century. Thanks to China’s land system, the rural land must be bought back by the local government before turning into urban land. The local government gets huge revenues during the process, which are called the "Land Finance". While, over-reliance on the land finance revenue can bring a lot of social problems. This paper emphasizes on the "land finance" of the Yangtze River Delta local governments. First, the paper measures the dependence of the local governments on the land revenues and discusses the possible reasons. Then, we base our empirical analysis on four models of the land market and real estate market, and find the shortcomings bought by "land finance". We believe that to help the local government fulfill their duties, new ways of financing need to be created. At present, the local financing platforms play a very important role in the local financial innovation, but a lot of problems have also been found. Based on this situation, the paper suggests several operational advices on the local financial innovation.This paper consists of five different parts. The first part is the introduction, which contains the background and related literatures. The second part measures the dependence of the local governments of the Yangtze River Delta on the land revenues and analyses the reasons behind it. The third part conducts the empirical analysis on four models of the real estate and land markets, and then discusses the shortcomings of over-reliance on the land finance. In the fourth part, based on the conclusion we get from the above analysis, we discuss the major financial innovation of the local government at present-the local financing platforms. The fifth part suggests that in order to get rid of over-reliance on the land financing and inappropriate financing from the local platforms, several news operational ways of local financing can be used.