Research On The Impact Of Government Debt On The Loan Scale Of Commercial Bank

Clarifying how government debt affects the scale of commercial bank loans is an important goal for strengthening the coordination of fiscal policy,monetary policy,and macro-prudential policy.To face the impact of the epidemic,fiscal policy proposes to increase the scale of government debt to provide financial support for economic recovery.And monetary policy proposes to lead the decline of loan interest rates and the direction of loan funds to meet the financing needs of market entities.The fiscal policy and monetary policy work together,while the government debt and commercial bank loans work together,too.At present,the scale of government debt continues is constantly expanding.The "loaning new and repaying the old" method has made government debt exist on a large scale for a long time,and debt risks have gradually transformed into fiscal risks and systemic financial risks.To prevent and control and resolve the risk of government debt,we need not only to standardize the financing mode of government debt and establish the early warning mechanism of government debt risk,but also to strengthen the coordination of debt policy and monetary policy to solve the government debt problem jointly.Under the background of macroeconomic regulation,this article studies the relationship between government debt and commercial bank loan scale.This has important practical significance for preventing and controlling government debt risks and deepening the government bond market.It also has a certain reference value for strengthening the coordination of fiscal policy,monetary policy and macro-prudential policy.Research on fiscal policy,monetary policy and the coordination of macro-prudential policy has been a hot topic of theory and practice.Previous studies have studied this problem from the relationship between government debt and commercial bank loan scale,and found that government debt affects commercial bank loan scale through quantity channels and interest rate channels.However,these studies did not consider the regulatory power of the financial departments on money circulation,and lack of financial explanation and Mechanism Analysis on the impact of government debt on the loan scale of commercial banks.Therefore,this article studies how government debt affects the scale of commercial bank loans based on the modern monetary theory and the new market finance theory.And the article takes the finance-central bank "dual-subject" monetary regulation mechanism as the analysis path.First of all,this article analyzes the centralized treasury collection and payment system from the policy text,which is the basic institution of government debt affecting the loan scale of commercial banks.Secondly,this articale proposes a mechanism path from the government debt issuance,circulation,use,and repayment to the loan scale of commercial banks.The mechanism path is based on the realistic basis of credit creation and interest rate market reform of commercial banks.After that,this paper constructs a mechanism model and uses balance sheet analysis to quantify the changes in the scale of commercial bank loans caused by changes in government debt.Finally,this article empirical tests how government debt affects the scale of commercial bank loans through quantitative channels and interest rate channels.It uses national and local government bonds as representatives of government debt.Specifically,this article is divided into five parts: The first part includes the first and second chapters of the thesis.The first chapter is the introduction,which mainly elaborates the research background,research significance,research arrangement,innovation and deficiencies of this article.The second chapter introduces the domestic and foreign related research,and finds the quantitative channels and interest rate channels that government debt affects the scale of commercial bank loans.Previous research has achieved rich results,but there are still some shortcomings.Firstly,it ignores the position of financial department as one of the mainstay of monetary regulation,and lacks the research of financial department to achieve monetary regulation through government debt.Secondly,it confuses the functions of different phases in government debt.The issuance,circulation,use and repayment of government debt have different effects on the scale of commercial bank loans.Thirdly,it did not consider the difference between government bonds and government loans,government bonds and ordinary bonds,therefore obscures the mechanism of government debt affecting the loan scale of commercial banks.The second part is the third,fourth and fifth chapters of the thesis.The third chapter clarifies the theoretical basis of government debt affecting the scale of commercial bank loans,the new market finance.On the basis of critical inheritance of Comprehensive balance theory of financial and credit,modern monetary theory,Monetarism on the relationship between finance and central bank,government debt and currency circulation,this article conducts a progressive study.Based on the theory of new market finance,this article explores how the financial department,as one of the "dual-subject" of monetary regulation,affects the relationship between government debt and the scale of commercial bank loans.The fourth chapter analyzes the centralized treasury collection and payment system,which is the basic institution of government debt affecting the loan scale of commercial banks.Through policy text analysis,it is found that government debt is included in the management of the centralized treasury collection and payment system as a form of fiscal revenue and expenditure,which enables the issuance,circulation,use and repayment of government debt to have control over currency circulation.The fifth chapter is the realistic basis for the influence of government debt on the scale of commercial bank loan,which are credit creation and interest rate marketization.The relationship between finance and banks affects the relationship between government financing and bank loans.With the continuous improvement of government financing methods,government bonds have become the most important way to make up for fiscal deficits.And commercial banks are the largest holding institutions of government bonds.In the background of commercial bank credit creation mechanisms and interest rate market reforms,government bonds change the scale of commercial bank loans through the influence of excess deposit reserves and price-based monetary policy tools.There are 1,275 national bonds and 5,768 local government bonds.The third part is the sixth chapter of the thesis.It combines theoretical basis,institutional basis and practical basis.And it uses models to describe how government debt affects the scale of commercial bank loans.In this section,it clarifies the influence path of government bond issuance,circulation,use and repayment on the scale of commercial bank loans through the analysis of capital flow paths among government departments,central banks,commercial banks,and private department balance sheets.The fourth part is the seventh and eighth chapters of the thesis.It contains the empirical tests of this article.It uses national and local government bonds as representative variables of government debt,while commercial bank loan balance and new loans as representative variables of loan scale.Then we empirically test how government bonds affect commercial bank loan scale through quantitative channels and interest rate channels.We use empirical methods such as VAR model,robust OLS regression,mediating effect model and panel regression to test how government bond issuance changes the scale of commercial bank loans.The monthly data of national bonds from 2006 to 2019 and the monthly data of local government bonds from 2009 to 2019 are used.We use the Interbank Offered Rate as a representative of a price-based monetary policy tool to examine how government bond issuance rates affect the Interbank Offered Rate and achieves its impact on the scale of commercial bank loans.The fifth part is the ninth chapter of the thesis.The ninth chapter summarizes the research results of this article,and puts forward relevant policy recommendations on this basis.It is expected to provide a certain reference for preventing and dissolving government debt risks and strengthening the coordination of fiscal policy,monetary policy and macro-prudential policy.Based on the above research results,this article draws the following three research conclusions:Firstly,the establishment of a centralized treasury collection and payment system has granted government debt the ability to regulate currency circulation.Government debt is included in the management of the centralized collection and payment system of the national treasury.And it is a part of the central bank's credit funds.According to the analysis of the new market finance about the finance-central bank “dual-subject” currency regulation mechanism,it shows that the financial department controls the funds of the treasury and has the power to regulate and control currency circulation.Government debt is a form of fiscal revenue.The changes in treasury fiscal deposits brought by the issuance,circulation,use,and repayment of national bonds also cause changes in currency circulation in the market.Secondly,different phases of government debt have a heterogeneous impact on the scale of commercial bank loans.The central treasury collection and payment system coordinated with commercial bank credit creation and interest rate marketization.It enables government debt to have an impact on commercial bank loans through quantitative channels and interest rate channels.Government debt issuance leads to a reduction in loan scale.Then in the circulation phase,the scale of commercial bank loans is adjusted in a short-term through commercial bank fixed deposits.In the use stage,the loan scale is increased by increasing bank deposits.And the repayment stage includes repayment of interest and capital.The increase in loan scale brought about by the repayment of budgeted funds partially offsets the decrease in loan scale brought about by the storage of funds.And the repayment by loaning the new and repaying the old does not change the amount of currency in circulation.The entire process of government debt will result in a slight increase in the scale of commercial bank loans(repayment of budget revenue)or a slight decrease in the scale of loans(repayment of the old by loaning the new).Thirdly,government debt affects commercial bank loans through the fiscal deposit mechanism.There are differences between the impact of national bonds and local government bonds.And there are also differences in the response of commercial banks to different types of loans.Here are four conclusions.(1)The increase in government debt has led to an increase in fiscal deposits,and an increase in fiscal deposits has led to a reduction in the scale of commercial bank loans.National bonds have a greater impact on commercial bank loans than local government bonds.(2)Government debt crowds out long-term loans,short-term loans,and corporate loans.Ranked in descending order of crowding out are corporate loans,longterm loans,and short-term loans.And Government debt enters into household loans.(3)The transmission effect of the interest rate of national bonds issuance on the loan scale of commercial banks is affected by the yield of national bonds.The scale of last month national bonds significantly reduced the scale of commercial bank loans.(4)Compared with national bonds,the interest rate of local government bond issuance contains more premium factors.The interest rate and scale of local government bond issuance significantly reduces the scale of commercial bank loans.The transmission effect is affected by whether it is a general bond or whether it is a replacement bond.Based on the above research,the following suggestions are made.The first one is clarifying the borrowers and standards of government debt,unifying government debt statistics.The second one is increasing the scope and proportion of government debt included in the management of the centralized treasury collection and payment system.The third one is strengthening government debt process management,keeping government debt risks under control.The fourth one is to subdivide the types of government bond and give full play to the power of government debt over commercial bank loans.The fifth one is to strengthen and improve the construction of the centralized treasury collection and payment system.strengthen the coordination of fiscal and monetary policies.