| In the process of macroeconomic operations,the increase in leverage rate will help promote investment and increase output.However,the high debt,excessive securitization,and asset price bubbles caused by the excessive increase in leverage will all increase potential financial risks.The financial risks cause financial instability and become the main trigger for the financial crisis.After the financial crisis in 2008,the China’s debt leverage rate rapidly rising.As of the first quarter of 2017,the overall leverage ratio of the non-financial sector in China has reached 256.8%,increasing by 115.5%compared to the end of 2008,and has far exceeded the average level of 190%of emerging market economies.At the same time as the rapid increase in leverage ratio,China’s macro economy has also ended high-speed growth for more than 30 years.The economic growth rate has continued to decline.The economic development has entered a period of "new normal" superimposed on growth shift,structural adjustment,and pre-stimulus policy digestion.While the accumulation of multiple major risks has brought even more severe challenges to the stable operation of China’s economy.Under the overall economic development strategic objectives of "steady growth" and "risk prevention",the deleveraging policy is not only the core content of advancing structural reforms on the supply side,but also promoting the sustainable and healthy development of the economy.It is also an important part of preventing financial risks and maintaining financial stability.This article focuses on the issue of China’s debt leverage,firstly elaborating the evolution of China’s debt leverage,analyzing the formation and change mechanism of debt leverage from the perspective of debt supply and demand,and empirically analyzing the factors affecting the changes in China’s debt leverage.On this basis,this article explores the macro effects of debt leverage,and adopts a combination of theoretical research and empirical analysis to analyze the impact of debt leverage on macroeconomic growth and financial stability,and finally draws lessons from the experience and foreign debt leverage adjustments,and proposes China’s debt leverage policy recommendations.It provides a theoretical reference for achieving the dual goals of "steady growth" and "risk prevention".The main conclusions of this paper are as follows:First,after the financial crisis in 2008,the level of debt leverage of all economic sectors in China has risen to varying degrees,which has led to a rapid rise in the overall level of debt leverage,which has become a major issue for China’s debt leverage.From the perspective of the supply and demand of debt leverage,changes in the level of money supply and interest rates under the adjustment of monetary policy and the scale expansion and structural changes in thefinancial system during the course of financial development will bring about the generation ofdebt and changes in size.At different stages of economic development,in the macroeconomic environment such as economic growth rate,profitability,and asset prices will affect thewillingness of the economic entities to raise financing and changes in debt sustainability,which in turn will lead to changes in the levels of debt leverage.Specific to the issue of China’s debt leverage,the increase in China’s debt leverage is mainly affected by the increase in money supply,the expansion of the financial system,the economic growth rate,and the decline in the profitability of the real economy sector,and the impact of the decline in the profitability of the real economy sector is relatively large Second,from the perspective of macroeconomic growth,debt leverage can promote the formation of economic capital and promote economic growth through the resource allocation function of finance and the "savings-investment" mechanism.The empirical analysis based on multinational panel data shows that the effect of debt leverage on economic growth is not linear.On the one hand,with the increase in leverage,its contribution to economic growth will increase first and then decline,showing an inverted U-shape.On the other hand,debt leverage has a significant threshold effect on economic growth under different]evels of financial development.Over-expansion of financial scale will inhibit the economic growth of debt leverage,while the improvement of financial efficiency and financial structure will help enhance the economic growth effect of debt leverage.As the level of China’s debt leverage continues to increase,it has approached the "turning point" of debt leverage,making its role in promoting economic growth gradually diminishing or even turning into an inhibitory effect.It is difficult to sustain economic growth model driven by high leverage,and at the same time,the over-expansion of the financial system and the single financing structure are also important factors affecting the growth effect of China’s debt leveraged economy.Thirdly,from the perspective of financial stability,the increase in debt leverage has contributed to an increase in social total demand,resulting in rising asset prices and the accumulation of financial risks.It also affects the stability of the entire financial system through the spread of risk among various economic sectors.Based on the financial stability index constructed from the perspective of financial market stability,we can see that the financial stability of our country has been declining in recent years;and the empirical results of the three-variable TVP-SV-VAR model including financial stability,economic growth and debt leverage constructed using this index,After entering the "New Normal",while the impact of China’s debt leverage on economic growth has turned negative,the negative impact on financial stability is also expanding.Further,from the analysis of the asset loss multiplier,with the increase in the level of debt leverage of various departments,the overall contagion multipliers of various departments and economic systems are also increasing,reflecting the effect of sector debt leverage on the stability of the macro financial system is also expanding.The main innovations of this paper are:First,based on the perspective of debt supply and demand,this paper constructes theoretical analysis framework of the formation and change of debt leverage,combining the main macroeconomic variables such as the adjustment of monetary policy,the development of the financial system,and changes in the economic cycle with debt leverage.Second,using the threshold panel model,the paper analyzes the nonlinear characteristics of the effect of debt leverage on macroeconomic growth from the perspective of changes in the level of debt leverage and changes in the level of financial development,and selects three different indicators,financial scale,financial efficiency and financial structure,to more fully understand the impact of changes in the level of financial development on debt leveraged economic growth effects,and also provide a new way of thinking for the balance between "delivery" and "steady growth" in the current situation.Third,this paper constructes China’s financial stability index from the perspective of financial market stability,and a three-variable TVP-SV-VAR model including financial stability,debt leverage,and economic growth to examine the time-varying impact of debt leverage on financial stability. |
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