| The study focuses on the inter-disciplineary area between fiscal and finance research,which explores the status of local fiscal risk and its linkage with financial market from a new perspective,the mechanism and approaches of local fiscal risk diffused into financial market.The new perspective investigates the pronounced effects of fiscal risk on financial market and citizen sectors.The study finally sheds lights on the governance of fiscal risks by establishing a suggestive risk management framework for policy makers.Under the background of fiscal decentralization,the scope of local government fiscal functions exceeds the range of public budgeting.Local government conducted considerable financing activities by the special purpose financing vehicle,including debt financing,financing guarantee,and other financing behaviors.These financing activities intensify the potential local fiscal risks.Due to the expanding of local government financing scales,and the more strictly the overseeing on local governments debts by higher levels governments,local government transfers the fiscal risk to financial market via the complex financial instruments and approaches,which threats the prosperity of financial market.The diffusion of financialized fiscal risks has attracted increasing attentions from the policy-makers and regulators.In 2004,the central government issued “Policy on Strengthen the Control of Local Governments Debts” in 2014,and new “Budgeting Law”,indicates that the debts issued by local government financing vehicles are not governmental debts,which clarifies parts of the implicit debts of local government.However,local governments are still constrained by the limited fiscal income due to the expenditures out of the “beneficial principals”.Consequently,they borrow funds from financial market via different channels.In sum,in the real local practices,due to the lack of regulations,some fiscal risks are not included in the public budgeting process,not disclosed in the fiscal reports,and are out of effective risk management;consequently,fiscal risks are transferred to financial markets.The expanding of fiscal risks in the financial markets threats the stable of financial market,which may incur financial risk,even systematical risk.Therefore,this thesis clarifies the diffusion mechanism of financialized fiscal risk,and more accurately interpret the scope of fiscal risks,and forecasting the economic consequences.Finally,it sheds lights on the fiscal governance,and provides suggestions for the stabilization of financial market.The research also enriches theories on fiscal policies from the macro perspective.The financing activities of local government could be understood as the fiscal policies of local governments,as these financing activities has the characteristics of budgeting and similar to long-term budgeting.However,most of the studies on the relation between fiscal activities and financial market focus on the fiscal policy and monetary policies.In real practice,financing is the primary characteristics of fiscal activities,while few studies explored the relation between the fiscal risks and financial institutions,especially the linkage between fiscal risks and the pricing of financial products.This study fulfills this by exploring the financialization of fiscal risks.This study shows that local fiscal risks reflect that,under the current government performance management and fiscal decentralization framework,the role of government changed and outweighs the scope of public management,as the use the credit of government to intervene in marketized debts market,which results in the financial diffusion of fiscal risks.The traditional diffusion mediation is financial institutions,this study further employs financial instruments as a channel and approaches for the diffusion of fiscal results and estimates the consequences.The paper finally innovatively proposes that the financialized fiscal risks should be supervised by the fiscal risk management framework.The thesis is organized as following: Chapter 1 is introduction,which introduces the backgrounds and implications of the topics,and summarized the current literatures.The research employs the governance for fiscal risk “Three-Level Framework”(democratical governance,expenditure management,and beneficiary principal)as a theory foundation.The literature review developed from five perspectives,including research on local fiscal risks,the models of local government financing,the nonstandardized debts of local government debts,the linkage between local government risk and financial risks,and the prevention of and solutions to fiscal risk.Chapter 2 investigates the classification,status,and features of fiscal risks.Due to the limitation of on the availability of reliable data and the existing research already expolired the local government fiscal risks,this chapter focuse on the typical fiscal risks including the decreases of fiscal revenues in 2017,the strict regulations on real estate industries destressed the fiscal income from lands.Chapter 3 introduces the institutional backgrounds of the financial diffusion of fiscal risks.Considering the special relation between local government and financial market,it explores the reasons of financialized fiscal risk from the perspectives of economic systems,fiscal policies and monetary policies.The research also compares the channels of “standardized creditor assets” and “non-standardized creditor assets”,and then indicates that securitization is the most effective approaches to solve the local fiscal risks.Chapter 4 investigates the consequences of the financial diffusion of fiscal risks.From the macro perspective,it explores the effects of financialized fiscal risks on monetary and fiscal policies;from the middle level,it compares the influences on emerging industries and excessive capacity industries;from the micro perspective,it provides operational strategies for banking institutions and non-banking financial institutions.Chapter 5 is empirical research.According to the theoretical foundations,the paper applies GARCH-CoVaR model to examine the relations between local governmental risk and shadow banking.The empirical results show that the local government debts have relatively higher spill-over on securities companies and trust companies,and then commercial banks.Meanwhile,under the new-normal backgrounds,local government debts risks have increasingly high spread on private capitals.Chapter 6 makes suggestions for the financial diffusion of fiscal risks.Firstly,it indicates the main challenges of the current fiscal risk management framework,including the re-definition of fiscal activities,the approval and authorization of local fiscal financing,the protections of the final-bearers of fiscal risks,the statistic systems for fiscal risks including budgeting,financial reporting,information disclosure and accountabilities.Secondly,it makes implications for the local government debts,by clarifies the local government responsibilities for local government debts,the transparency of and preventability of local governmental debts.The study has significant policy implications.From the perspective of central and local governments,to avoid the “Tragedy of the commons” in the fields of public policies,studies on the financial diffusion of fiscal risks contributes to the assessments of fiscal sustainability,the safety of fiscal policies and the stability of financial market.As fiscal risks are implicitly diffused via financial channels,and therefore the “fiscal control system” cannot address the issues.Hence,this research finally focuses on the development of traditional fiscal risk control framework to capture the diffused fiscal risks.Otherwise,the fiscal risk will be significantly weakened(Schick 1998).This study starts from the micro and macro disciplines,to achieve the fiscal expenditures,deficits,and debts are meets the governmental target and the fiscal sustainability.The study investigates the diffusion and transforming of local fiscal risks,assesses the arrears risks,contributes to the prevention of fiscal risks and local fiscal safety and sustainability. |
PDF Full Text Request