Why Do Municipal Investment Bonds Continue to Grow?——An Empirical Analysis Based on New Statistical Scope
- CAO Jing, MAO Jie & XUE Yi
- University of International Business and Economics, 100029.
The continuous growth of the scale of local government debt (including municipal investment bonds issued by local financing platforms) is a prominent phenomenon in China's economic and social operation in recent years. In order to overcome the shortcomings of the data of municipal investment bonds with Wind statistical scope, the authors use a new database of municipal investment bonds. Based on this database, using the data of municipal investment bonds issued by prefecture-level cities in China from 2006 to 2015 under the new statistical scope, as well as the financial variables of prefecture-level cities and the information of key officials, the authors made an empirical analysis of the expansion of municipal investment bonds under the pressure of local finance, promotion of officials and urban development. The results show that: (1) Fiscal pressure is not the main reason for the expansion of municipal investment bonds; (2) Influenced by promotion pressure, prefecture-level cities whose Party secretaries are in a certain age group (55-58 years old) are more inclined to issue municipal investment bonds and expand the scale of municipal investment bonds; (3) In the prefecture-level cities under greater development pressure (including the level of economic development, industrialization, urbanization and investment in fixed assets, etc.), the stimulating effect of promotion pressure on the scale of municipal investment bonds is more prominent. These conclusions are very robust. Further analysis shows that the impact of promotion pressure and development pressure on the expansion of municipal investment bonds shows obvious heterogeneity in the aspects of active and passive liabilities, the use of bond funds, bond maturity, government guarantee and whether the place of issuance belongs to certain urban agglomeration. The above findings provide a scientific basis for a deep understanding of the debt problem of local governments in China and a reasonable formulation of relevant policies to mitigate the risk of local government debt.
- Local Government Debt, Municipal Investment Bonds, Fiscal Pressure, Promotion Pressure, Development Pressure