The Impact Of Digital Finance On Local Government Debt Risk

For a long time,the scale of local government debt has continued to expand,and the debt risk is increasing day by day,which has aroused great concern of the central government.The Ministry of Finance issued documents to strictly control the issuance limit of local government bonds and further suppress the living space of hidden financing channels such as financing platforms.However,the scale of local government debt is still growing rapidly,reaching a new high in 2020,reaching a total balance of 25.67 trillion yuan.High local government debt constitutes a serious risk.As a new financial service model backed by the Internet,based on opening up customer service channels and deriving a variety of financial operation scenarios,digital finance has injected vitality and vigor into the traditional financial industry.Digital finance has been proved to play a significant role in serving the financing of small and medium-sized enterprises,filling the urban-rural income gap,improving the credit evaluation system and alleviating information asymmetry.Therefore,at the moment of the prosperity and development of digital finance,exploring the impact of the development of digital Finance on local government debt has timeliness significance.At the theoretical level,this paper combs and summarizes the existing research,briefly describes the development process,main characteristic and development status of digital finance in China,summarizes the research on the policy history,risk sources and risk status of local government debt,and puts forward the spatial impact mechanism and intermediary impact mechanism of digital Finance on the risk of local government debt.At the empirical level,this paper uses the indirect measurement algorithm to estimate the government debt increment and stock of 31 provinces in China from 2011 to 2020,and uses the entropy weight method TOPSIS to construct the local government debt risk evaluation index.On this basis,this paper uses the spatial econometric model,and uses China’s Regional Digital finance index measured by the digital finance center of Peking University as the main explanatory variable for empirical test.The study found that both digital finance and local government debt risk index passed the Moran index test,which was verified to have spatial correlation,indicating that they need to pay attention to the regional coordinated development.The regression results of spatial Dobbin model show that the impact coefficient of digital Finance on local government debt risk in China is negative,indicating that the development of digital finance has an inhibitory effect on local government debt.Under the three spatial matrices,the model conclusions are valid.In addition,the incentive effect of digital Finance on consumption and enterprise innovation can burst out the vitality of local economy,expand the tax base,increase government revenue,and stabilize the solvency of local governments.Through the intermediary effect verification of tax capacity,the results show that digital finance has a positive impact on Local Taxation,while both digital finance and taxation are negatively related to local government debt risk,which proves that the above impact mechanism hypothesis is valid.