Causes Of Regional Differences In Land Finance: Financial Pressure Or GDP Competition

Land finance refers to that when Chinese tax system reform in 1994, the central and local fiscal decentralization system is not perfect. Local government finds that they have more things to do but less fiscal levy to have. In order to ease the financial pressure, local governments use the big price difference through land acquisition and land transfer to obtain the proceeds of the process of transfer. the emergence of land finance makes the government which is lack of funding sources more confidence in the development of industrialization and urbanization. It enhances the government's comprehensive ability to promote the development of China's urbanization, and also makes the real estate industry develop by leaps and bounds. However, at the same time, the problems of over-reliance on land finance, urban land disorderly expansion and the rising of the resource development and housing prices continue to rise and other issues increasingly prominent.These problems increase the local financial and financial risks, resulting in economic structural imbalance, and restricts the development of land finance. So how to solve the problem of land finance has become the focus of attention.Land finance as a way for the government to increase its income is usual at domestic and foreign . The researching on Foreign Land Tax System, Especially the study of fiscal decentralization , makes our scholars has a more mature theoretical basis in the study of China's land finance .They analysis of the two Hypothesis of Differences in Land Finance in China. One is the financial stress hypothesis which is means that the greater the financial pressure of a region, the other conditions are the same, the land of the financial phenomenon will be more prominent. The other is the GDP race hypothesis which means that The higher the region's economic growth, the other conditions are the same, the more prominent the financial phenomenon of the land.The central idea of this paper is to study the causes of regional differences in land finance . According to the research, there are two hypotheses about the causes of land finance in China. One is the fiscal pressure hypothesis and the other is the GDP tournament hypothesis. This paper collects data of 13 cities in Hubei province in 2000-2014. Using the proportion of the land transfer in the local GDP as the financial strength index, using the ratio of government expenditure to local GDP as the financial pressure index,using the growth rate of GDP as the GDP growth index and Using two-way fixed effect model to make regression. The final conclusion is that in the 13 city in Hubei Province financial pressure hypothesis the hypothesis that factors affecting the establishment of land finance. According to the local fiscal pressure to decide ,land finance of each region is different. In summary, it is pointed out that the government needs to regulate the land market, improve the transparency of government finance,regulate government behavior to coordinate interregional economic development.