Local Government Debt Financing Mechanism and Implicit Debt Management:An Analysis of the Government Debt Financing Behavior in the Reform of Withdrawing Counties and Establishing Districts
This paper empirically examines the impact of the reform of withdrawing counties and establishing districts on the expansion of local implicit debt through the local government debt financing mechanism.The results show that the reform of withdrawing counties and establishing districts can lead to the expansion of the scale of local implicit debt by influencing the leverage of land financing and competition for investment demand on both the supply and demand sides of the government's debt financing mechanism,and at the same time form a number of paths at the project and finding levels.From the perspective of the debt regulation environment,the stricter the debt regulation is,the more it can inhibit the effect of the reform of withdrawing counties and establishing districts on the expansion of the scale of implicit debt Further analysis shows that,the policy of"making local debt explicit"can inhibit the expansion effect of the reform of withdrawing counties and establishing districts on the scale of implicit debt due to the substitution effect of explicit debt and the incremental compression effect of implicit debt.The above findings have policy implications for the prevention and resolution of local debt risks and the realization of new urbanization:It is necessary to prudently promote urbanization under the mode of administrative division adjustment,open the"front door"of debt financing,promote the transformation of financing platforms and compliant financing of projects,and reduce the dependence on land financing and strengthening debt supervision,etc.A more effective long-term mechanism to prevent and resolve local debt risks should be constructed.
Debt Financing MechanismLocal Government Implicit DebtThe Reform of Withdrawing Counties and Establishing Districts
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