The Influence Mechanism Of Local Government Contingent Debt Scale Expansion And Its Management And Control Countermeasures

Local government contingent debts,as a derivative and accessory of economic and social development,is an important part of local government debt.Whether it can be effectively resolved is not only related to the improvement of national governance capabilities,but also the resolution of systemic financial risks.In the past period of time,because of the lack of understanding of the connotation,characteristics,scale and impact mechanism of local government contingent debts has led to the formation and expansion of local government contingent debts,which intensified the local government debt risks.Excessively high local government contingent debts will expand the structural contradictions of economic development,worsen the government's credit environment and affect the economic healthy development.In severe cases,it will lead to large-scale financial systemic risks,trigger social unrest,and cause economic long-term downturn.In order to effectively resolve the local government contingent debt risks,our country has successively issued a number of documents about government debt management and control aspect.The State Council issued the "opinions on strengthening the management of local government debts" in 2014,which required strict restrictions on local government debt-raising procedures and the implementation of quota management on the local government scales,Local government debt scales must not exceed the quota standard for borrowing,he Contral Committee of the Communist Party of China and ihe State Council issued the "opinions on preventing and resolving the hidden debt risks of local governments" and the "measures for the accountability of local government hidden debts" in 2018.This document marks that our country has changed the implicit response of local government debts from passive response to active prevention,and has effectively promoted the governance of implicit local goverernment debt.Frequent policy documents for local government debt risk management and control have been issued,which conveyed the central government's determination to "control debt local government risks and prevent financial risks".Therefore,it is of great practical significance to develop the influence mechanism of local government contingent debts scale expansion and its management and control countermeasures.Only by accurately understanding the impact factor and function mechanism of local government contingent debts scale expansion can we fundamentally resolve the local government contingent debts from the source.This article first sorts out and analyzes the relevant basic theories of local government contingent debts expansion,and reviews and summarizes the relevant research from the four aspects of local government contingent debt connotation classification,scale measurement,influencing factors,and management and control countermeasures in order to clarify the entry point,key point and innovation point of this article.Then,the article calculates four types local government contingent debts caused by local financing platforms,local state-owned enterprises,local non-performing loans,and local pension gaps based on the principles of data availability,importance,and substance over form of current.Finally,based on grounded,agency and moral hazard theories,the paper discusses its impact of local government contingent debts expansion and its mechanism from three perspectives:internal institution,government motivation,and external mechanism.After research,this article draws the following research conclusions:(1)Local government contingent debts formed by four types of local financing platforms,local state-owned enterprises,local non-performing loans,and local pension gaps,have shown a trend of increasing year by year after 2010,and reached 19.95 trillion yuan in 2019,Which is 1.9 times the local fiscal revenue in 2019 and accounts for about 20%of the national GDP.This shows that it takes nearly two years of local fiscal revenue to repay the local government contingent debts,or only 20%of national income to offset the local government contingent debts.(2)In terms of the internal institution factors of local government contingent debts scale expansion,by using 282 prefecture-level cities from 2006 to 2018 as a research sample,the study found that the higher are the local government's fiscal and financial decentralization granted to central government,the higher are the local government contingent debts expansion.Further research found that investment impulse plays an mediating role in the process of fiscal and financial decentralization on the local government contingent debts expansion.Political incentives play a moderating role in the process of fiscal and financial decentralization on the local government contingent debts expansion.(3)In terms of government motivation factors of local government contingent debts scale expansion,this paper finds that growth-oriented governments(compete for growth)will intensify the expansion of local government contingent debts,while development-oriented governments(pursue high-quality development)has a significant inverted U-shaped relationship with the expansion of local government contingent debts,which manifests first promoting and then suppressing.Further research found that the positive relationship of the growth-oriented governments on the expansion of local government contingent debts showed obvious differential influence at the level of local leaders' gender,but the differential influence was not significant at the level of local leaders' age.While the U-shaped relationship of development-oriented governments on the expansion of local government contingent debts not only was showed differential influence at the level of local leaders' term,but also showed differential influence at the level of local leaders' degree.(4)In terms of the external mechanism factors of local government contingent debts scale expansion,this paper found that government audit has a restraining function on local government contingent debts,and the media attention to local government contingent debts expansion shows an inverted U-shaped relationship that promotes first and then restrains.Further research found that credit expansion and investment expenditures play a mediating effect in the process of government audit on the local government contingent debts expansion,and resource misallocation plays a mediating effect in the process of media attention on the expansion of local government contingent debts.From the above research conclusions,it can be seen that fiscal decentralization,financial decentralization,growth-oriented governments,and the insufficient of government audit will aggravate the expansion of local government contingent debts.While,development-oriented governments and media attention on the expansion of local government contingent debts are expressed as an inverted U-shaped relationship that first promotes and then inhibits.This article puts forward manage and control suggestions to prevent the expansion of local government contingent debts from the perspectives of financial institution,government behavior and external mechanisms based on the research conclusions.The research conclusions of this paper not only greatly enrich the existing literature on local government contingent debts,but also provide important theory and empirical evidence for the country in terms of "managing and controlling local government debt risks,preventing systemic financial risks,and pursuing high-quality development".