| The problem of local government debt in China has existed for a long time.Local government debt mainly comes from banks and other financial institutions.The increasing local government debt has increased the provincial financial risk and threatened the stability of the financial system.The implicit spread and expansion of debt risk in the financial system is not conducive to the healthy development of the financial industry,and will inevitably lead to systemic financial risk.Firstly,this thesis analyzes the current situation of local government debt and provincial financial development in China.The scale of local government debt is huge.Debt risks may arise from problems such as mismatch between the size of the debt and its fiscal strength,lack of accountability for debt repayment,and mismatch between the maturity of funds and liabilities.At the same time,due to the uneven distribution of financial resources in China,there is a large gap in the level of financial development among the provinces and regions.Secondly,this thesis uses fixed asset investment in municipal area of local government,capital input in local government budget,funds used for investment in land transfer income of local government and profit cash inflow of local government investment project to calculate the amount of local government debt of the provinces from 2009 to 2016.The result shows that there is a very obvious gap in the scale of local government debt in the provinces.The provinces with large scale of debts are mainly the provinces with higher fiscal revenue and higher GDP.Then,this thesis constructs the index system of provincial systemic financial risk from the perspective of macro-economic risk,fiscal risk,financial risk and external shock risk,and uses the global principal component analysis method to calculate the provincial systemic financial risk index of each province from 2009 to 2016.The result shows that provincial systemic financial risk score is higher in the provinces where the stock market is active,the real estate industry is overheated,and the foreign economy and trade are well developed.Finally,this thesis uses the spatial econometric model to test the influence of local government debt on provincial systemic financial risk.The empirical result shows that the total amount of local government debt,the growth rate of local government debt and the debt ratio of local government all have a significant positive impact on the provincial systemic financial risk in this province,while the new increment of local government debt has a significant negative impact on the provincial systemic financial risk.In addition,the total amount of local government debt,the new increment of local government debt and the growth rate of local government debt have no significant spatial spillover effect on adjacent provinces,only the debt ratio of the local government has a significant positive impact on the systemic financial risks of the adjacent provinces,and the effect of the debt ratio on the outside of the region is more obvious than the effect on the region.The debt ratio of local government has a significant spatial spillover effect on provincial systemic financial risk.In order to prevent and manage the provincial systemic financial risk in China,the spatial spillover effect of local government debt risk should not be ignored.It is necessary to strictly supervise the path and function channel of the provincial systemic financial risk spillover.Based on the above research,it is necessary to establish a sound and effective risk management system of local government debt in order to prevent local government debt risks from spreading to financial systems.At the same time,the government should improve the efficiency of the use of funds,strictly control the debt ratio of local governments,regulate the relationship between local governments and the provincial financial system,and strengthen the institutional constraints of the financial system on the risk spillover of local government debt. |
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