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Does Long‐Term Local Government Debt Destabilize Corporate Stock Prices? Empirical Evidence From China

Wanting Zhang et al.

Economics & Politics2026https://doi.org/10.1111/ecpo.70041article
AJG 2ABDC A
Weight
0.50

Abstract

The paper investigates how the maturity structure of local government debt influences corporate financial stability. Using a matched panel data set of Chinese A‐share listed firms between 2009 and 2023, we document that a shift toward longer public debt maturity substantially raises corporate stock price crash risk. This effect operates through three channels that induce corporate maturity mismatch, lower investment efficiency, and increase default risk. We further show that structural monetary policy can mitigate the adverse consequences, while debt issuance intensity exhibits a nonlinear threshold. These findings identify a significant microtransmission mechanism through which local government debt maturity decisions amplify financial fragility.

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https://doi.org/https://doi.org/10.1111/ecpo.70041

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@article{wanting2026,
  title        = {{Does Long‐Term Local Government Debt Destabilize Corporate Stock Prices? Empirical Evidence From China}},
  author       = {Wanting Zhang et al.},
  journal      = {Economics & Politics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/ecpo.70041},
}

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Does Long‐Term Local Government Debt Destabilize Corporate Stock Prices? Empirical Evidence From China

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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