The impact of local government fiscal gaps on public-private partnerships: government demand and private sector risk aversion
Xiong, Min Cheng, Shaoming Guo, David Zhao, Jerry Zhirong
Xiong, Min
Cheng, Shaoming
Guo, David
Zhao, Jerry Zhirong
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2022-09-15
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Xiong, M., Cheng, S., Guo, H., & Zhao, J. Z. (2022). The impact of local government fiscal gaps on public-private partnerships: Government demand and private sector risk aversion. International Public Management
Abstract
While government fiscal gap is traditionally considered a demand factor for the use of public-private partnerships (PPPs) to deliver public services, a high level of fiscal gap may signal elevated financial risks to private partners and deter them from entering into PPP agreements. A causal mediation analytic framework is used to delineate the two distinct causal pathways. We develop a conceptual model and test derived hypotheses with data of Chinese prefecture-level cities during 2015–2017. The findings suggest that government fiscal gap has a positive impact on PPP adoption, through the mediating role of the debt position. The fiscal gap, as a risk factor, is negatively associated with PPP participation. Risk aversion of the private sector manifests more conspicuously as smaller PPP investment amounts than as a lower likelihood of PPP participation. The adverse effects of the fiscal gap associated with financial risks may entirely offset any positive impact.
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Routledge
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International Public Management Journal
2022
2022
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1096-7494