Local Implicit Debt Risk,Banks'Risk Perception and Corporate Credit Availability
The report to the 20th National Congress of the Communist Party of China states that it is necessary to"guard the bottom line against systemic risks".Government implicit debt is a critical area of risk prevention and resolution.Commercial banks,as the most important provider of funds for local government implicit debt,have the keenest sense of local implicit debt risk.At the same time,commercial banks are the most important suppliers of funds to all kinds of market players in China,which are important hubs connecting various sectors.Can their perception of the risk of local implicit debt affect their credit allocation to enterprises in the same region?This paper attempts to investigate the impact of local implicit debt risk on the availability of credit to enterprises through rigorous empirical research and to clarify its possible influence mechanism.Using a sample of listed companies from 2005 to 2020,this paper explores the impact of local implicit debt risk on the availability of credit to local enterprises,and the channels of its effect through the establishment of a three-sectoral analytical framework of governments,banks and enterprises.It is found that an increase in local implicit debt risk significantly reduces the credit availability of local firms,and is more significant in the samples with lower local financial regulation,lower digitization of regional commercial banks,and state-owned enterprises(SOEs).The mechanism analysis shows that an increase in local implicit debt risk reduces credit availability to firms by increasing banks'liquidity hoarding and raising lending rates.Further research shows that an increase in local implicit debt risk significantly increases the scale of equity financing and the scale of commercial credit financing for firms.This paper integrates the government,banks and enterprises into one analytical framework to investigate the impact of local implicit debt risk on the availability of credit to enterprises,which helps to clarify the potential mechanism of risk transmission,and provides relevant empirical evidence and policy recommendations.Compared with existing studies,this paper may have the following contributions.It enriches research on local implicit debt risk.Most of the existing studies on implicit debt risk focus on the measurement and contagion of the risk,and there are few studies on the relation between local implicit debt risk and enterprises,while the study in this paper can fill in this gap.In addition,previous research on government implicit debt and corporate finance has only focused on debt financing,and this paper finds that when the credit availability of enterprises is affected by local implicit debt risk,it may force enterprises to adjust or optimize their own financing structure.This result is also useful for understanding the economic impact of local implicit debt risk.Finally,this paper clarifies the potential ways of local implicit debt risk transmission to the real economy,which can help establish a more accurate and powerful monitoring mechanism of implicit debt risk,clear the blockage of economic development,and provide reference for the realization of the dual objectives of"risk prevention"and"stable growth".
local implicit debt riskcorporate financingbank loansliquidity hoarding
万方数据
维普
