| Reform of the tax distribution system having been accomplished,central and local governments have instituted a decentralization system,transferring power to lower levels and augmenting financial authority.The long-term mismatch between income and powers has caused local governments to form fiscal revenue and expenditure gaps.For better development,most provinces and cities make up for the gap by means of implicit borrowing and illegal guarantee.Among them,debt can be roughly divided into explicit debt and implicit debt.Due to the ambiguous attribution boundary of implicit debt,it resulted in a large amount of accumulation under the background of early loose monetary policy.After the promulgation of the new Budget Law of the People’s Republic of China,the provincial governments were given the power to borrow within the limit,and the local governments began to replace the previously illegal hidden debts with the existing local government bonds in the legal form.Since then,off-balance sheet debts have gradually been converted into on-balance sheet debts,and the debt,bond issuance and principal and interest service of various provinces have entered the budget and final accounts,subject to public supervision.In order to prevent the local government debt risks from spreading to the surrounding areas through the regional financial system and forming systemic financial risks,it is helpful to strengthen the management of risks to understand the size of local government debt risks and regional financial risks,and to clarify the transmission routes between the two main sectors of economic operation and the influence relationship between them.On the basis of sorting out the concept,causes and manifestations of local government debt risk and regional financial risk,this paper analyzes the risk transmission channels among the four main sectors of economic operation.Taking the data of 30 provinces and cities from 2012 to 2021 as samples,the size of provincial debt risk and regional financial risk of each province is measured.Meanwhile,the spatial Durbin model is used to empirically-study the spatial spillover effect between the two risks,and the threshold model is further used to study whether there is threshold effect between the two risks based on the level of economic development and the gap between fiscal revenue and expenditure.The results show that local government risk has a significant positive spatial spillover effect on regional financial risk,and there is a threshold effect based on the level of economic development and the gap of fiscal revenue and expenditure,that is,the impact between the two risks is nonlinear.Finally,based on the research conclusions,the paper puts forward suggestions to mitigate the local government debt risk and regional financial risk. |
