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Political favoritism in China’s capital markets and its effect on city sizes

Chen, Ying, Henderson, J. Vernon and Cai, Wei (2017) Political favoritism in China’s capital markets and its effect on city sizes. Journal of Urban Economics, 98. pp. 69-87. ISSN 0094-1190

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Identification Number: 10.1016/j.jue.2015.10.003


This paper examines political favoritism of cites in national capital markets and the effect of that favoritism on city sizes. The paper estimates the city-by-city variation in the prices of capital across cities in China from 1998 to 2007. It relates how the prices facing the highest order political units and overall cross-city price dispersion change with changes in national policy and leadership. The effect of capital market favoritism on city growth after the national relaxation of migration restrictions in the early 2000’s is investigated. The elasticity of the city growth rate with respect to the price of capital is estimated to be −−0.07 in the OLS approach and −−0.12 in the IV approach.

Item Type: Article
Official URL:
Additional Information: © 2016 Elsevier Inc.
Divisions: Geography & Environment
Subjects: H Social Sciences > H Social Sciences (General)
Date Deposited: 06 Nov 2015 11:20
Last Modified: 16 May 2024 02:25
Projects: 8005077
Funders: World Bank

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