Research On The Crowding-out Effect Of Urban Investment Bonds On Corporate Financing

Since the tax sharing system,the local government has changed from operating enterprises to operating production factors and places.As a way of raising funds for local governments,urban investment bonds have already solved problem of resources about funds for local governments’ operation and development.However,the quick development of urban investment bonds has also produced a series of hidden problems,one of which is the crowding out of corporate financing behavior.This paper finally selects Hefei and Guiyang as the empirical materials for case comparison to reveal the whole process of local government debt crowding out enterprise financing behavior.This paper follows the analytical thinking from theoretical construction to case study.Firstly,we theoretically construct the mechanism by which urban investment bonds may crowd out the financing behavior of enterprises.Then,Hefei and Guiyang are selected as research cases to verify how the financing activities of enterprises are affected by the scale of local debt from the two aspects of urban overall,micro enterprises,mainly including enterprises with different ownership systems,and the top/ bottom five enterprises.Through the related analysis between the stock of urban investment bonds at the city level and the financing scale and cost of enterprises,as well as the test of the evolution trend between the financing status of the top / bottom five listed companies and the regional urban investment bonds,it is verified that the urban investment bonds can not only squeeze out the credit resources of enterprises,but also an important reason for raising the financing cost of enterprises.We find that there is an inference of crowding out effect at both the city and the enterprise analysis level.Based on the conclusion of case comparison and the evolution details of government debt,this paper finally come out corresponding countermeasures and suggestions.Local government borrowing is positive on local short-term social employment and economic development,public utilities and even the economy.Our research provides typical facts for the quantitative analysis conclusions in the existing literatures,expands the theoretical mechanism of quantitative research,and applies it to specific cases.In addition,this research gives policy suggestions from the local government,platform companies and enterprises,which has certain policy implications for how to mitigate the potential negative impact of local debt in practice.In addition,for the two major case cities-Guiyang and Hefei,our research conclusions also help to promote the governments of the two cities to provide certain incentives to get out of the debt dilemma and reduce the debt burden.