Research on the Impact of Local Government Debt Expansion on Banks'Total Factor Productivity
Against the backdrop of accelerating the construction of a new development pattern and striving to promote the high-quality development of the real economy,improving banks'total factor productivity is an important means and a link to enhance the quality and efficiency of financial services to the real economy.However,the expansion of local government debt financed by bank loans will inevitably hinder the improvement of banks'total factor productivity.Based on the typical facts of rapidly rising local government debt and the specific business practice of commercial banks,this paper systematically sorts out the underlying mechanism of local government debt expansion affecting total factor productiv-ity of banks.Based on the construction of a global Malmquist-Luenberger index using a two-stage dynamic network DEA ap-proach to measure banks'total factor productivity,this paper empirically tests the theoretical research hypotheses using unbal-anced panel data of 212 commercial banks in China during 2007-2020.The empirical results show that local government debt expansion significantly reduces banks'total factor productivity.The results of the heterogeneity analysis show that the negative effect of local government debt expansion on total factor productivity is more significant for small banks,non-listed banks,and banks that have not introduced foreign strategic investors.Further research finds that local government debt expansion reduces banks'total factor productivity through a channel that exacerbates asset-liability mismatches.In particular,this paper also finds that the negative impact of local government debt expansion on banks'total factor productivity is more in terms of techno-logical progress and reducing both the level of efficiency in the first stage of the bank's operation process and the level of effi-ciency in the second stage.Accordingly,this paper argues that reasonably controlling the scale of local government debt and strengthening the market-based mechanism of local government debt financing are the key measures to improve the total factor productivity of banks so as to contribute to improving the quality and efficiency of financial services to the real economy.
Local Government DebtBanks'Total Factor ProductivityAsset-Liability Maturity MismatchTwo-Stage Dynamic Network DEA
NETL
NSTL
万方数据
