Can The Attitude Of Local Governments Affect The Regional Financial Cycle

In the context of the increasingly unstable global economy,the financial cycle,as a leading indicator of financial development and operating conditions,is of great significance in macroprudential research.As my country is the world’s second largest economy,the particularity of the economic system environment has led to strong economic autonomy for local governments,and each locality also formulates local policies with regional characteristics based on the conditions and characteristics of the region.In this context,even if each region is affected by the unified monetary policy,the management characteristics of each region have caused the regional financial cycle to not completely converge,and there are still significant differences between them.As local governments,as managers of macro-prudential goals in the region,whether their attitudes towards financial development and operation affect the regional financial cycle is the main issue to be explored in this article Through the study of the relationship between the posture of local governments and the regional financial cycle,we can explore the reasons for the differences in regional financial cycles,discover how local governments affect the financial cycle,and help the implementation of macro-prudential management.On the basis of financial cycle theory and attention management theory,this article discusses whether the posture of local government will affect the regional financial cycle and how the posture of local government affects the regional financial cycle.Specifically,this article selects credit,housing prices,and leverage ratios to use the HP filtering method to measure my country’s 2004-2019 provincial regional financial cycle,and uses the computer language Python to use the provincial government work report during 2004-2019 through text analysis.Measure the posture indicators of local governments in each region Then,the system GMM is adopted to investigate the relationship between the posture of local government and the financial cycle,and the regional effect,competition effect and channel effect between the two are studied through further modeling.Through the calculation and measurement of the regional financial cycle and the posture of local governments,as well as the investigation of the relationship between the two,this article draws the following conclusions:(1)The fluctuation direction of the regional financial cycle is the same,but there are obvious differences in the characteristics of the regional financial cycle.(2)From the national average,local government attitude indicators show cyclical fluctuations over time.This feature is more consistent with the fluctuations of the financial cycle.From the perspective of different regions,local government attitude indicators in different regions are quite different,and This difference is not determined by the level of economic development.(3)The posture of the local government has a restraining effect on the fluctuation of the regional financial cycle,which shows that the local government will restrain the fluctuation of the financial cycle under the objective of macro-prudential management.In terms of regional effects,the governmental posture in the northern region has a higher degree of influence on the regional financial cycle than the southern government;in terms of competition effects,other regional governmental postures with similar economic development levels also have a stronger inhibitory effect on the regional financial cycle;In terms of channel effects,the posture of local governments has a certain restraining power on the credit cycle and promotes the real estate price cycle,but the posture of local governments has little effect on the leverage cycle.