Local government debt is a long-term and complex problem in China's current economic operation.Exploring the economic consequences of local government debt and its functioning mechanism can help provide insights into the efficient use of local government funds.Bond financing,as an important direct financing channel for enterprises,can not only reduce the excessive reliance on bank loans and expand financing channels but also alleviate the maturity mismatch in the financial market and play an important role in economic development.The frequent occurrence of bond defaults in recent years has caused damage to the interests of investors and reflected certain irrationality in the current bond pricing.One of the main reasons for this is that the government's"explicit support"and"implicit guarantee"have long existed in the bond price.Local government debt provides a good opportunity to study the impact of"explicit support"and"implicit guarantee"mechanisms on corporate bond credit spreads.This paper empirically examines the impact of local government debt on bond credit spreads using corporate bonds,enterprise bonds and medium-term notes issued by listed enterprises during 2007-2020.It is found that the larger the scale of local government debt,the higher the corporate bond credit spreads.The mechanism test shows that local government debt plays a role in bond credit spreads through the"explicit support"and"implicit guarantee"behaviors of local governments.Heterogeneity analysis reveals that the effect of local government debt on bond credit spreads is more pronounced in local state-owned enterprises(SOEs),firms with high default risk,and firms located in areas with strong government intervention.Further exploration shows that the higher the size of local government debt,the lower the credit rating of corporate bonds;local government debt governance reform policies weaken the enhancing effect of local government debt on bond credit spreads.The results show that local governments should reasonably plan the debt scale,and optimize the allocation ratio of credit resources between local financing platform companies and entity enterprises to achieve the complementary advantages of government and enterprises.Business operators should formulate investment and financing strategies that are compatible with the economic environment,and make investment decisions cautiously under the premise of fully understanding the financial situation of the investing region.Based on existing literature on the relationship between government debt and corporate bonds,this paper expands research on local government debt problems and bond markets in the Chinese context,and innovatively expands the unique mechanism of government behavior affecting corporate bond financing.This further deepens research on the impact of local government debt on the real economy,which is of great practical significance for preventing local government debt risk and improving the understanding of economic participants in local government debt risk.
local government debtbond credit spreadsdebt repaying pressureexplicit supportimplicit guarantee
NETL
NSTL
万方数据
