Luxury hotels mushrooming and extravagant governments

Abstract

This paper empirically examines the effect of nontax revenue on demands for luxury hotels in China where the strict public financial supervision is not well-established. Results indicate the nontax revenue significantly influences luxury hotel demands across the country and that government demands have crowding out effect on private demands for luxury hotels, all of which appear more salient in Chinese underdeveloped areas with more severely deficient public financial supervision.

Keywords:

• luxury hotels
• government demands
• nontax revenue
• crowding out effect
• public financial supervision

Notes

1. Since the data of nontax revenue have never been published until 2007, and have been just updated to 2012, all the variables range from 2007 to 2012.

2. Underdeveloped areas refer to remaining provinces except Beijing, Tianjin, Shanghai, Liaoning, Hebei, Guangdong, Fujian, Shandong, Jiangsu, and Zhejiang whose GDP per capita rank at the forefront of China.