Fiscal Decentralization, Official Experience And Local Government Contingent Debt

After the global financial crisis in 2008,Chinese government formulated the4000 billion economic stimulus plan for economy steady and relatively fast growth,and this strategy make a sharp increase of Chinese local government debts.In order to know the size of local government debts,the national auditing office organized twice auditing work in 2011 and 2013.The auditing show that the total size of the Chinese local government debts was 17890 billion until 2013 June,and 39.15% was local government contingent debts.In recent years,the implicit gap on pension is enlarged,the rejection rate on commercial banks is still high,the European debt crisis was outbreak,Detroit was bankruptcy,these phenomenon attracted the academic community's thinking.This paper caught the phenomenon that local government contingent debts was increasing as the research point.Based on the literature,I analysis this question by economic theory and accounting theory,and I summarized the local government contingent debts' concept and features,explained the cause of formation and the necessity of existing.I summarized the reasons of local government contingent debts---the fiscal Decentralization and the officials' promotion incentive,to make an empirical analysis and provide the evidence.This paper researches on the artificial and institutional factors why Chinese local government contingent debts expanded in recent years by empirical analysis of2009-2013 province-level panel data.The study finds that the degree of fiscal decentralization impacts local government contingent debts of each province significantly and positively after controlling those potential factors such as provincial fixed assets investment and transfer payment.This paper explores the impacts to local government contingent debts' size,based on economics learning experiences,economics working experiences and leadership experience in corporation of provincial secretary and governor.The result shows that working experience ineconomic department and leadership experience in corporation has significant positive effect,learning experience has positive effect but insignificant,and the governor in charge of economic work has more significant effect than provincial secretary.Finally,this paper grafted several policy suggestions about how to deepen the form of fiscal decentralization,reform official evaluation mechanism and increase auditing efforts to local government contingent debts based on the conclusions.