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1261Entrepreneurship activity is a concentrated manifestation of urban economic vitality, and also an important driver for achieving high-quality economic development. Entrepreneurship activity not only needs market incentives, but also relies on the support of public investment. Municipal bonds issued by financing platforms provide a unique and important perspective for studying the intrinsic link between public investment and urban entrepreneurship activity.
This paper empirically examines the impact of municipal bonds on urban entrepreneurship activity using panel data of 269 prefecture-level cities from 2006 to 2017. It is found that municipal bond issuance significantly increases urban entrepreneurship activity. Heterogeneity analysis finds that the impact of municipal bonds on entrepreneurship activity is more prominent among secondary and tertiary sector enterprises, small and micro enterprises, and non-state enterprises. Mechanism testing indicates that improving infrastructure, enhancing the level of urban public services, and alleviating financing constraints are the mechanisms by which municipal bonds affect urban entrepreneurship activity. Further analysis indicates that for financing platforms with a high degree of marketization, municipal bond issuance has a more significant impact on urban entrepreneurship activity.
The contributions of this paper are as follows: (1) There is a lack of literature on the study of urban entrepreneurial activity from the perspective of public investment. This paper expands the research scope of factors affecting entrepreneurship activity in the Chinese context. (2) Based on the theoretical framework of entrepreneurship situations, this paper systematically investigates the mechanism of municipal bonds on urban entrepreneurship activity from the two dimensions of spatial situation and institutional situation, and the three channels of infrastructure construction, urban public services, and financing constraints, which contributes to understanding the inherent mechanism of how public investment promotes high-quality urban economic development. (3) From the perspective of municipal bonds, this paper confirms the positive effect of public investment on promoting urban entrepreneurship activity, providing policy insights for resolving local debt risks in development at this stage.
