The Impact of Land Finance on Urban Construction Land Expansion in China—An Empirical Analysis Based on Provincial Panel Data

Due to China's fast urbanization, the expansion of urban construction land has recently received significant academic attention, and the assessment of the effect of land finance on urban spatial development has been expanded. Even though the significance of land issues is well acknowledged, there hasn’t been much research done to analyze how land finance affects the expansion of urban construction land. Few studies have been completed at the macro level or on the variations in impacts among cities in different areas, and the research that has been done tends to be case studies from some typical cities. Using panel data from 29 provincial administrative units in China from 2008 to 2020, this paper introduces the two-way fixed-effects model to further explore the relationship between land finance and the expansion of urban construction land in China at the national and regional levels. According to the study's findings, local governments' incentive to grant extra-budgetary revenue makes them attempt to increase the scale of land finance through outward sprawl. This encourages the expansion of urban construction land. Further research reveals that there are large regional disparities in the impact of land finance on land expansion for urban development. Based on regional economic conditions, land finance has a significant positive impact on the expansion of urban construction land in the middle and western areas. Finally, appropriate policy implications are suggested based on the findings of the empirical analysis, including improving the land property rights system properly, enhancing the regulatory framework, and maximizing the potential of stock land, which have consequences for directing the orderly growth of cities and attaining sustainable urban development.