Research On The Influence Of Local Government Debt Leverage Ratio On High-quality Development

In the macro-economic operation,leverage can stimulate consumption and investment and promote the economy,but high leverage can easily lead to debt crisis and systemic financial risks.Chinese local government debt has a remarkable effect in maintaining growth and expanding domestic demand,but it also accumulates huge debt risks.Debt risk is one of the important risks that cause losses to financial institutions such as banks and creditors.With the gradual tightening of financing environment,the high level of local government debt and heavy debt burden have seriously threatened the stability of China’s financial system and hindered economic development.At the same time,problems in China’s economic development have become increasingly exposed,which calls for abandoning the model of high-leverage economic development and paying more attention to improving the efficiency and quality of development.In this context,the 2015 Central Economic Work Conference clearly identified "de-leveraging" as one of the five tasks of the supply-side structural reform.The 14 th Five-Year Plan proposed "promoting high-quality development as the theme",and stressed that the macro leverage ratio should be "stable while falling",so as to ensure high-quality development through "stabilizing leverage".Therefore,it is of great significance to study the impact of local government debt leverage ratio on high-quality development for resolving local government debt risks,maintaining the stability of the financial system and promoting economic development.This paper studies the influence of local government debt leverage ratio on highquality development.First,based on debt-deflation,financial repression and financial deepening theory,financial accelerator theory,financial instability hypothesis,leverage cycle theory and financial business cycle theory,the direct impact of local government debt leverage ratio on high-quality development is analyzed theoretically.This paper also discusses the mechanism of local government debt leverage ratio on high-quality development from the perspective of micro enterprise leverage ratio,macro financial stability and the connotation of high-quality development,and puts forward research hypotheses.Secondly,a high-quality development evaluation index system was constructed,and the principal component analysis method was used to calculate the highquality development index of 30 provinces,municipality,and autonomous regions in China from 2005 to 2020.Thirdly,a fixed effect model is constructed to analyze the influence of local government debt leverage ratio on high-quality development,and the endogenous problem is dealt with the systematic GMM model and instrumental variable method.The intermediary effect model is used to test the mechanism of local government debt leverage ratio affecting high-quality development.The panel threshold model is used to test the debt leverage balance points in China,the eastern region and other regions.The results show that:(1)There is a nonlinear relationship between the leverage ratio of local government debt and high-quality development,which presents an inverted U-shape,and there is a debt leverage ratio balance point.(2)There are regional differences in the influence of local government debt leverage ratio on high-quality development,mainly reflected in the difference of leverage ratio balance point.The balance point of government debt leverage ratio in the eastern region is high,and the space for government borrowing is large.In other regions,the balance point of government debt leverage ratio is low and the space for government borrowing is relatively small,which is easy to trigger debt risks.(3)The leverage ratio of local government debt can affect high-quality development through the leverage ratio of enterprises.The increase of local government debt leverage ratio can have a crowding in effect on enterprise leverage first,and then have a crowding out effect,which will have an impact on high-quality development.(4)Local government debt leverage ratio can affect high-quality development through financial stability channels.With the increase of local government debt leverage ratio,financial stability has shifted to instability,thus affecting high-quality development.(5)The leverage ratio of local government debt mainly promotes innovation and coordination to improve the level of high-quality development,and has an inverted U-shaped nonlinear effect on green development,openness and sharing,which plays a role in promoting highquality development first and then weakening.Based on this,this paper puts forward the following policy suggestions: Control the scale of local government debt reasonably;Innovate the way of local government debt financing;Establish a risk control mechanism for local government debt;Strictly supervise the local government debt financing platform;Improve the efficiency of using local government debt.