The Research Of Local Fiscal Risk Based On The Perspective Of Financial Vulnerability In China

The financial crisis which happened in 2008 has brought a huge negative impact on China's economic development,to prevent problems the economic downturn after the financial crisis,realize the goal of "growth",the Chinese government has introduced a new round active fiscal policy as the characteristics of cutting tax and increasing spending.From the point of practical effect,this round of macroeconomic regulation and control policies is very timely and correctly,almost achieve the goal of “growth”.Active fiscal policy,however,is not a good with nothing to lose,it caused the increasing of the local government fiscal deficit and debt scale,local finance hidden financial risks greatly.Therefore,the health of local government fiscal has become a hot spot of social public and academic research.From the existed research results,scholars has did lots of research around the financial risks of local government,fiscal sustainability and debt risk,and has obtained the comparatively abundant research results.By studying of existed literature,however,found that the following four problems remains to be study in-depth further:(1)With the rapid expansion of the deficit and debt scale,how high degree of local financial vulnerability in China?(2)Which is factors that affect local government financial vulnerability in China exactly? What is the influence mechanism?(3)How to adjust local fiscal revenue and expenditure under the fiscal imbalances in China,what is the relationship between local fiscal revenue and expenditure? In view of this,this article on the basis of defining the connotation of the financial vulnerability,using the correlation methods,using the latest data to measure local financial vulnerability,and research the influence factors of local financial vulnerability based on the two aspects of macro economy in the outside of the financial system and the financial system itself,on this basis,and analyzed the adjustment characteristics under the imbalance of financial revenue and expenditure,several important conclusions are drawn:First,the measurement results of the local financial vulnerability of 20 provinces found that financial areas become “vulnerable” state into was more and more from 2004 to 2012,because of the local governments have taken some fiscal behavior,which put finance on the path to return to the “good”;financial areas become “vulnerable” state was less and less between 20 provinces of China since 2013,financial areas become “vulnerable” state between 20 provinces was only 13 in 2014,accounting for 65.00% of the total sample size,there has been a big improvement compared to previous years.But we should also see that local financial vulnerability as a whole has risen to a high degree in China,which makes the whole face the more and more liquidity and solvency risk.So,for most of the provinces in China,they can not continue to use expansionary fiscal situation,and the capacity of issueing debt to finance deficit financing is not too much,the government should control the total debt and deficit further,take actively fiscal adjustment,avoid the financial risk of liquidity and solvency.Second,to reduce the financial vulnerability,dissolve the financial crisis,this article research the influence factors of local financial vulnerability based on the two aspects of macro economy in the outside of the financial system and the financial system itself.the results based on dynamic panel model of SYS-GMM and steady inspection found that the lag of financial vulnerability,economic growth,the fluctuation of economic growth and the ratio of fiscal spending to income and growth rate of local government debt have significant positive influence on financial vulnerability,namely to have played an important role in inhibiting the improvement in local financial conditions;And inflation,and an aging population and foreign trade export has a significant negative effect on local government financial vulnerability,namely to have played an important role in promoting the improvement in local financial conditions.Therefore,in order to ensure fiscal health sustainable development in China,reduce the financial vulnerability.On the one hand,the government need to keep the macroeconomic stability development of China and makes a steady economic growth in China,grow the residents' disposable income and consumption continues,avoid massive unemployment situation;On the other hand,the government need to optimize the debt structure,adjustment of financial revenue and expenditure,increase exports,making China's foreign exchange reserves increase,enhance the public and private sectors of foreign debt paying ability,avoid the debt crisis.Third,this paper choose the local fiscal revenue and expenditure as sample from 1994 to 2014 after the fiscal reform of local government,using the quantitative and qualitative analysis method to study the relationship between local fiscal revenue and expenditure in China,found thatlocal fiscal revenue and expenditure have interactional relationship after the tax reform in 1994,which conform to the “fiscal synchronization between hypothesis”;In addition,local fiscal revenue and expenditure have the long-term stable equilibrium relationship,and the growth of fiscal revenue and expenditure are same basically.This shows the growing fiscal deficit and debt scale in China,serious financial imbalances,and adjusting combine fiscal revenue and expenditure can solve the problem of imbalances and improve the fiscal situation in China.In the long run,China's fiscal outlook can't simply choose “tax-and-spend”or “spend-and-tax”,the government should choose the fiscal principle of “give priority to in order to raise surely receiveto receive a complementary” which is based on national conditions.Only in this way,fiscal policies can closer to the standard fiscal policy,make the financial revenue and expenditure more balance for a long time,adjust fiscal policies to the path of “good”,reduce local financial vulnerability,thereby reducing the possibility of financial risk in China.Finally,in order to reducing the vulnerability of local finance and improving the condition of local finance of China,this paper will offers some policy suggestions,which is based on the research content and the related conclusions of this article.