Research On The Impact Of Local Government Debt Repayment Capacity On The Efficiency Of Credit Resource Allocation Of Urban Commercial Banks

In the process of regional economic development,the credit resources of urban commercial banks have always been a key resource.By reasonably allocating credit resources,the balance between supply and demand of funds has played a crucial role in local economic development.At present,the current situation of China’s financial system development determines that the banking industry is the dominant factor.In the development process of urban commercial banks,the close relationship between local governments and urban commercial banks determines their ability to intervene in the credit resources of urban commercial banks to a certain extent.In recent years,local governments have faced increasing pressure on their debt repayment ability.Intervention in the allocation of credit resources for urban commercial banks under debt repayment pressure can affect the efficiency of credit resource allocation,leading to inaccurate and efficient allocation of credit resources.Therefore,it is very important to effectively allocate valuable credit resources for urban commercial banks under debt repayment pressure faced by local governments.Our country’s urban commercial banks are based on serving the local economy and promoting local economic development.Since the reform and restructuring in 2003,urban commercial banks have entered a rapid development stage.As of October 2022,the asset size of urban commercial banks in China has reached 48.75 trillion yuan,accounting for 15.89%of the total assets of commercial banks,and are increasingly becoming an important component of China’s banks.From the perspective of the development and positioning of urban commercial banks,the equity composition of most urban commercial banks cannot be separated from the injection of funds from local governments.In most cases,local governments are the largest shareholders of urban commercial banks and have strong control over them.The positioning of urban commercial banks is also to serve the local economy.The current development of China’s financial system also determines the role of urban commercial banks in regional economic development.Therefore,local governments can exert influence on the allocation of credit resources for urban commercial banks.In the process of regional economic development in China,local governments play a key role,and the competition between regional development is becoming increasingly fierce,manifested in the growth rate of GDP,which cannot be separated from the large-scale investment of financial resources.With the implementation of the tax sharing system reform,local governments are facing the dilemma of mismatch between financial and administrative powers.The implementation of real estate regulation policies will break the situation where local governments rely too much on land fiscal revenue to obtain funds.Government investment projects are also time-consuming and have low returns.At the same time,in order to raise funds for economic development,the scale of local government debt remains high.In addition to explicit debt,implicit debt issued by local financing platforms is also worth paying attention to.This has led to pressure on local government revenue on the one hand,and the need to repay local government debts on the other hand,which may lead to a debt repayment crisis for local governments.In the context of insufficient solvency,GDP growth targets,promotion incentives for officials,and other factors inevitably require local governments to increase their financial investment.Local governments face the dilemma of insufficient funds themselves.In this dilemma,local governments have a strong motivation to intervene in the allocation of credit resources of urban commercial banks under their influence and control,achieving the goal of compensating for the shortage of local investment funds under debt repayment pressure.How does the solvency of local governments affect the investment of credit resources in urban commercial banks,and what impact will local government intervention have on the efficiency of credit resource allocation in urban commercial banks? This article analyzes the above issues through theoretical analysis and empirical analysis.In terms of theoretical analysis,the relevant concepts and relationships are first defined,and theories such as fiscal decentralization theory,principal-agent theory,rent-seeking theory,local debt theory,development and political views are used to lay a theoretical foundation for the theoretical analysis of the impact of local government debt paying ability on the efficiency of credit resource allocation in urban commercial banks.Secondly,analyze the scale of local government debt,the current status of debt repayment capacity,the development history of urban commercial banks,and the efficiency of credit resource allocation.Subsequently,a detailed analysis was conducted on the impact mechanisms between local government debt repayment capacity,local government intervention,and the efficiency of credit resource allocation in urban commercial banks.It was believed that under debt repayment pressure,local government intervention in the direction of credit resource allocation in urban commercial banks would lead to a decrease in credit resource allocation efficiency and a decrease in asset operation efficiency.In terms of empirical research,this article refers to relevant literature and scholars’ practices,based on provincial local government finance and debt data,establishes a systematic evaluation system for local government debt paying ability,and uses entropy method to calculate the comprehensive debt paying ability scores of provincial local governments from 2012 to 2021.Then,after calculating the quantitative evaluation data of the solvency of local governments,we use the panel data data of urban commercial banks in 31 provinces,autonomous regions,and municipalities directly under the Central Government that basically cover the whole country from 2012 to 2021(excluding Taiwan,Hong Kong,and Macao Special Administrative Regions of China)to establish an OLS regression model to test whether the allocation of credit resources of urban commercial banks is effective,Using the cost of funds at the enterprise level to construct a provincial level credit resource allocation efficiency indicator to measure the efficiency of credit resource allocation.Through empirical analysis,the following conclusions are drawn:(1)The weaker the debt paying ability of local governments,the lower the efficiency of credit resource allocation in urban commercial banks to departments with lower efficiency,manifested as lower credit resource allocation efficiency.(2)Through empirical mechanism analysis,it is found that in situations where the solvency is poorer,local governments are more motivated to guide the credit investment direction of urban commercial banks through government intervention measures to affect the efficiency of credit resource allocation of urban commercial banks.Specifically,the weaker the solvency,the more credit resources of urban commercial banks are directed towards local state-owned economic departments.However,the efficiency of these loans is relatively low,Causing worse efficiency in credit resource allocation.After the empirical analysis and mechanism analysis,this paper considers the endogeneity problem,and conducts a robustness test.It deals with the core explanatory variables by lagging behind the first order,and tests the replacement of the explained variables.The above conclusions are still valid,and pass the robustness test.Considering the significant differences in China’s economic development,in order to make the conclusions more targeted,heterogeneity analysis was conducted.In the regional heterogeneity test,there were significant regional differences.Compared to the western region,due to its poor economic level and high dependence on urban commercial bank credit resources,the above conclusions were more significant when the debt repayment ability was insufficient.At the same time,differences in bank size were considered and heterogeneity testing was conducted,The results show that the poorer the debt repayment ability of local governments,the more inclined they are to utilize the credit resources of larger urban commercial banks,because large urban commercial banks often bear the responsibility for regional economic development.Finally,based on the research results,this article proposes corresponding suggestions from the aspects of fiscal system reform,constraining local government behavior,market-oriented transformation of urban commercial banks,and improving internal control systems,in order to improve the debt paying ability of local governments,reduce local government intervention,and enhance credit resources of urban commercial banks.