Research On Reasons Of Local Government Debt

Since the outbreak of the European debt crisis,the eyes of all sectors have been focused on government debt.Although Ireland had got out of trouble before the end of 2013,the concern from academics did not be reduced.In particular,after the credit downgrate,domestic local officials and scholars give an insight into Chinese local government debt.To impulse the reform and opening up and to creat high development speed,local government,especially municipal government,plays a dominant role.With limited financial income,local government affords massive debt in order to improve local welfare,construct supporting facilities and promote economic development.Former researches focus on historical evolution,foreign experience,potential risks,etc.and rarely explore the reason behind,let alone system deficiency.In China,information about local government's debt is in severe shortage,system root and influence factor are unclear,corresponding measure is not specific.In reference to the predecessors' research results,this paper finds the system root from the perspective of local government and innovatively makes empirical analysis with open bonds data.On the one hand,this paper perfects the theoretical system of Chinese local government debt and enriches the influencing factors of local government debt from the quantitative perspective;on the other hand,it provides theoretical basis for management of local government's debt.The contents of this paper are divided into four aspects:First,literature review on predecessors' research results about historical evolution,foreign experience,potential risks,etc.Second,based on audit report on government debt,summarizing from scale,government hierarchy,regional distribution,debtor and source.Also,describing variation in scale,government hierarchy,regional distribution and debtor to reveal development of Chinese local government debt.Third,according to theoretical summary,using local government's bonds and urban construction investment companies' bonds during 2009 to 2016,making empirical regression with autonomy of debt issuance and behavior of local officials.The regression results prove theoretical summary,which means that autonomy of debt issuance and behavior of local officials can lead to increase in bonds.Fourth,based on summaries and regression results,clarifying power,matching financial rights,establishing debt management system of local government and urban construction investment company,setting reasonable criteria,improving assessment mechanism of officials,etc.to control local government debt risk.There are several innovation:First,analyzing the system root from the perspective of local government and influencing factors of local government debt from the quantitative perspective.As conclusion,pointing out that autonomy of debt issuance and behavior of local officials are influencing factors,while,deficiency of fiscal decentralization system and assessment mechanism of officials are the primary causes.Second,using data of local government's bonds and urban construction investment companies' bonds to substitute local government debt,which providing a new idea,making up shortage of quantitative regression to a certain extent.