An Empirical Study On The Factors Affecting The Credit Spread Of City Investment Bond Of Local Governments

The city investment bond was born in a special historical environment.It is closely related to the debt problems of China local governments and has also contributed to China's infrastructure construction and local economic development.However,as China's financial deleveraging and local government debt swaps have advanced in recent years,the credit risk of city investment bonds has continued to accumulate.The new debt management regulations issued successively since 2014 require local governments to stop undertaking city investment debts.The "rigid payment" expectations of city investment bonds have been broken,and the financing platform is facing the road of market-oriented transformation of "self-financing.As a special intermediary linking local governments and financing platforms,once the credit risk of city investment bonds spreads,it will have an inestimable impact on the entire credit bond market and local debt.Therefore,this dissertation mainly discusses the sources of credit risk of city investment bonds around the two main bodies of local governments and financing platforms.This dissertation takes credit spread as a proxy variable of credit risk,and collects data from 2014 to 2019 to conduct theoretical and empirical analysis on the factors that influence the credit spread of city investment bonds.In the theoretical part,this paper mainly analyzes the credit risk of city investment bonds around capital asset pricing theory.In the empirical part,based on previous research results,this dissertation selects four major influencing factors(including macroeconomic factors,local government financial conditions,city investment bond debt factors and financing platform financial conditions)to construct a multiple linear regression model,and uses a stepwise regression method to obtain significant explanatory variables.On the basis of the main regression,combined with the fiscal and financial system background of the city investment bond,further consider regional differences.The first is to compare the gap between the east and the west and divide the area into coastal and non-coastal areas;the second is to further compare the gap between the north and the south based on the comparison between the east and the west,with Jiangsu Province as the boundary.Next,carry out regression analysis comparison and coefficient difference t-test according to regions to explore whether regional differences in factors such as economic development levels and local government financial strength will have different degrees of impact on city investment bond credit spreads.Finally,we discuss whether there are interactions between the two key variables(local government financial factors and financing platform financial factors),and construct the intersection of the two variables toverify whether the city investment bond credit spread will be changed by the interaction between explanatory variables.The empirical results show that both the local government's financial situation and the financing platform's financial situation will have a significant impact on the city investment bond credit spread.When the local government's financial situation and the financing platform's financial situation are better,the city investment bond credit spread will be smaller,and vice versa.After considering the regional differences,it can be seen that coastal areas are more prominent than non-coastal areas,north of Jiangsu province and south of Jiangsu province(inclusive).The significance level of local government financial factors is higher than that of financing platforms,and the main explanation is the local government financial situation.Furthermore,there is a significant negative interaction between the local government's financial situation and the financing platform's financial situation,which leads to an increase in the credit spreads of city investment bonds and greater credit risk.Finally,based on the research results,this dissertation provides suggestions for the future development of the city investment bond market from the perspective of financing platforms and local governments.