Research On The Threshold Effect Of Corporate Sector Debt Level On Economic Growth In China

Appropriate level of leverage can effectively promote economic growth,but when the leverage rate is too high,the pressure of debt repayment caused by debt cost may become a shackle hindering economic growth.According to the theory of economic cycle,once the economy enters the stage of low growth or even recession in the cycle and forms a vicious dynamic circle between unsustainable high debt and low growth,the economic development may fall into the "debt trap".Therefore,the topic of this paper is to study the relationship between the level of corporate sector debt and economic growth,in order to test whether China has fallen into the debt trap and other issues.It has important theoretical value and practical significance for preventing financial systemic risks and resolving the difficulties faced by China’s current economy.Firstly,this paper analyses the current situation of the debt level of the enterprise sector,and grasps the development trend and regional differences of the leverage rate of the enterprise sector in a more comprehensive way.Then we construct a theoretical model of the effect of corporate sector debt level on economic growth,and describe the impact mechanism of corporate sector debt level and economic growth from the theoretical level.The reason is that the lower efficiency of corporate sector capital use leads to the threshold effect of debt level on economic growth.In the empirical part,we use the provincial panel data of industrial enterprises with a time span of more than 2002-2017 to analyze the threshold effect of debt level on economic growth by threshold regression model,and to test whether the relationship between debt level and economic growth has changed structurally.Furthermore,the unit asset income index of the enterprise sector is used to replace the nominal GDP index of per capita,and the robustness test is carried out.This paper finally comes to the following conclusions: Firstly,based on theoretical model analysis,there is a threshold effect between corporate sector debt level and economic growth.Secondly,with the improvement of the debt level of the enterprise sector,the impact of debt level on economic growth has been reversed fro m promoting to inhibiting.Thirdly,from the perspective of corporate sector debt,China’s economic growth has not fallen into the "debt trap",but the risk is increasing.In order to reduce the possibility of debt crisis,China must reduce the leverage ratio of enterprise sector as soon as possible,and prevent the excessive rise of enterprise debt through policy restrictions and guidance.Specifically,we can consider the following aspects: improving the efficiency of capital use;effectively implementing structural deleveraging;promoting the construction of multi-level capital market;gradually resolving the problem of excess capacity;and implementing macro-prudential management of corporate sector liabilities.