A Study Of Regional Differences In Local Government Financing Methods And Their Influence Mechanisms

Taking the new Budget Law revised in 2014 as the dividing point,at the current stage,local government financing in China presents a new pattern.Local governments have started to issue bonds in the form of self-issuance and selfrepayment,LGFVs that had made important contributions to the urbanization process and infrastructure project construction have entered a period of transformation and development,while the PPP is being promoted and used as an innovative financing method.Among them,municipal investment bonds and PPP,as important channels for local governments to obtain funds outside the legal debt issuance route,show obvious regional differences in the scale of financing between the two.By combing the existing studies,some scholars have noticed the regional differences in the financing mode of PPP and explained the reasons for the differences at the level of regional "hard power" or "soft power".Therefore,the PPP is an appropriate starting point for the study of financing differences.However,it is difficult to find out the requirements of regional characteristics compared with other financing methods when studying them separately.At the same time,local governments are motivated to obtain more funds through financing for infrastructure construction,mismatch between financial and administrative powers,and competition for performance,but the total amount of financing required is within a certain range.Focusing on the single difference in financing method may overlook the impact of other financing methods on it.Since the scale of municipal investment bonds issued by financing platforms,another major financing method at the current stage,is mainly related to the policy system,fiscal status,financial development,promotion pressure,land finance,transfer payments,etc.,this paper innovatively incorporates municipal investment bonds and PPP into a unified perspective to identify the use of financing methods by local governments preference and explore the reasons for the differences in financing methods.Using the provincial panel data from 2015 to 2020,this paper uses the absolute deviation method to measure the financing scale gap between municipal investment bonds and PPP model in turn,and draws a bubble chart to divide 30 regions in China,so as to present regional differences in financing methods.Further,in order to explore the causes of the differences in local governments’ financing methods,this paper constructs a dependency index of financing methods to reflect the intensity of local governments’ use of financing methods.Starting from the regional characteristics of economic development,financial debt and market opening,it clarifies the influencing mechanism of regional characteristics on the differences in financing methods.Specifically,we first construct a Probit model based on the bubble diagram of financing mode differences to explore the influence of regional characteristics on financing mode preferences;then,on the basis of the influence of financing mode preferences on regional characteristics,we construct a two-way fixed-effect model to further reveal the influence mechanism of regional characteristics on financing mode preferences through comparative analysis;finally,through comprehensive financial power heterogeneity analysis and dynamic panel model Finally,we refine the influence mechanism of regional characteristics and examine whether there is "inertia" in the variable of financing mode dependence through comprehensive financial heterogeneity analysis and dynamic panel model.The empirical study finds that:firstly,there are differences in the use of financing methods by local governments in the financing process,and these differences are manifested in different financing method preferences,which can be classified into areas with preferences for municipal investment bonds,areas with preferences for PPP,and other types of areas with the help of bubble charts.Second,the reason for the differences in financing modes is that the use of financing modes by local governments is doubly constrained by regional characteristics,one is that financing mode preferences are influenced by regional characteristics,and the other is that the regional characteristics acting on the two financing modes are different:the regional characteristics that significantly affect the dependence of municipal investment debt are mostly closely related to the local fiscal debt status,while the regional characteristics that significantly affect the PPP mode are mostly closely related to the market opening.Third,the association between the two financing modes and regional characteristics is further refined under the influence of comprehensive financial power heterogeneity,and the association between financing mode dependence and fiscal debt characteristics is weaker in the low financial power group.At the same time,the substitutability between municipal investment bonds and PPP may lead to the advantages of PPP not being reflected.The innovation of this paper is mainly reflected in two aspects:First,since the relationship between different financing modes is similar to a dynamic scale,it is difficult to clarify the dynamic changes at both ends of the scale by analyzing only one end of the scale,therefore,unlike the independent studies on municipal investment bonds or PPP models,this paper incorporates them into a unified vision and takes the lead in analyzing the mechanism of regional characteristics affecting the two financing modes.This new idea not only helps to develop a comprehensive understanding of financing modes,but also can directly address the reasons for the differences in financing modes.Second,there are various financing methods available to local governments,and based on the global perspective,how to measure the intensity of local governments’ use of a certain financing method is the focus of this paper,and this paper innovatively constructs a financing method dependency index to solve this problem.At the same time,this paper presents the regional differences of financing methods intuitively by drawing bubble charts for the first time,which provides a method reference for clarifying the preferences of financing methods in different regions.