The Impact Of Local Government Debt Expansion On Bank Risk Taking

In 2008,when the financial crisis broke out,the central government issued a 4 trillion yuan investment stimulus plan to maintain economic growth.At the same time,local government debt grew sharply.According to the statistics of national local government debt audit results,by the end of 2010,the total debt balance of provincial,municipal and county-level local governments had reached 10717.491 billion yuan.In terms of the growth rate of debt scale,the growth rate of debt scale was 48.20%in 1998,and 61.92%in 2009.In the 12 years from 1998 to 2010,the average growth rate of local government debt scale was 33.87%.However,the growth rate of debt scale is too fast,even faster than the growth rate of GDP and fiscal revenue,which will lead to local fiscal difficulties,inability to pay off the debt,and lead to government debt risk.In 2018,the director of the central bank and officials of the Ministry of Finance expressed different opinions on the enthusiasm of fiscal policy and the status of financial institutions,which played a weak or collusive role in the local debt mess.In this paper,by constructing b-favar model,considering the macro level factors and the micro level factors of the bank,and establishing the impact identification mechanism of symbol constraint,and using the quarterly data of up to 10 years,analyzing the channels of local government debt expansion,and further influencing the bank risk-taking under different channels under the premise of verifying the existence of the bank risk-taking channels The conclusions are as follows:(1)There are three ways to expand the scale of local government debt:local government debt active leverage,money supply increase,interest rate tightening.In addition,this paper also analyzes the macro effects of local government debt leverage:the positive impact of local government’s active expansion debt impact on GDP has been verified;local government debt leverage has a certain regulatory effect on inflation impact,and has a significant inhibitory effect on both quantitative and price monetary policy impact.(2)This paper confirms the existence of risk-taking channels of commercial banks.For the impact of expansionary quantitative monetary policy,both banks’ active and risk-taking are on the rise,while for the impact of tight price monetary policy,the active risk-taking of commercial banks is on the decline,while the passive risk-taking is on the rise;in addition,the risk-taking channel of price monetary policy is more direct and stable than that of quantity monetary policy.(3)Among the three channels of local government debt expansion:first,in the case of local government’s active debt expansion,local government’s active debt expansion leads to the rise of banks’ active and passive risk-taking;second,in the case of local government’s debt expansion caused by increasing money supply,local government’s debt expansion weakens the rise of banks’ active risk-taking,Third,in the case of local government debt expansion caused by tightening interest rates,the decline of banks’ active risk-taking is weakened and the passive risk-taking is relatively increased.