The Impact Of Local Financing Platform Debt On Corporate Financing

By the end of 2022,local government debt stood at 34.89 trillion yuan,a five-fold increase from 6 trillion yuan in 2016.As the main channel of local government investment and financing,the debt of financing platform is also an important part of local government debt.There are hidden risks behind the continuous expansion of local financing platform debt,especially it will intensify the financing competition between government and enterprises.Due to the imperfect financial system and undeveloped financial market,market entities such as enterprises and government financing platforms mainly rely on bank credit,and enterprises are at a disadvantage in the competition with financing platforms,facing serious credit discrimination and financing predicament.Based on the background of debt risks of local financing platforms and the dilemma of financing constraints of enterprises,the central government has launched a series of policy reforms under the policy tone of preventing and defusing financial risks.In 2015,the Ministry of Finance launched a three-year debt replacement program for local governments to ease the pressure on financing vehicles to repay their debts.This article starting from the perspective of debt replacement policy,this paper selects the data of financing platforms in prefecture-level cities and A-share listed companies to carry out an empirical study by using multi-time point differential method.This paper mainly answers the following two questions: First,can the local government debt replacement policy alleviate the crowding out effect of financing platform debt on corporate financing? Second,if policy can have a positive impact,what is the mechanism of policy action?First,this paper sorts out the political relevance theory,financing constraint theory and crowding out effect theory,providing theoretical support for understanding that local government debt replacement alleviates government-enterprise competition.Secondly,this paper further combs the literature on the relationship between local government debt and corporate financing,and the macro and micro effects of debt replacement policy,and summarizes the shortcomings of the existing research and the possible improvements.Finally,this paper combines research questions and theoretical analysis to put forward three research hypotheses.In the empirical part,this paper manually collected the implementation time of local government debt replacement policy and sorted out relevant data of enterprises,financing platforms and commercial banks.The policy effect and mechanism of debt replacement are tested by using the multi-time point differential model.Benchmark regression results show that local government debt replacement can alleviate the crowding out effect of financing platform debt on corporate financing.Heterogeneity analysis shows that the easing effect of debt replacement is more significant in cities with greater local government debt pressure,cities with fewer profitability and private enterprises,thus verifying research hypothesis1.In terms of mechanism analysis,the empirical results of this paper confirm that the local government debt replacement policy cannot effectively improve the liquidity level of financing platforms,and give a reasonable explanation from the defects of debt replacement program,obstacles in the implementation process and macroeconomic fluctuations,thus verifying the research hypothesis 2.As for the mechanism analysis of commercial banks,the empirical results of this paper prove that local government debt replacement can effectively improve the liquidity level of commercial banks,thus increasing the loanable capital scale of commercial banks,and thus easing the financing constraint dilemma of enterprises.The research hypothesis 3 has been further verified.According to the above research conclusions,this paper puts forward specific policy suggestions for different subjects,so as to promote the effect of debt replacement policy and better alleviate the financing constraints of enterprises.First,further implement the relevant policies of debt replacement and optimize the implementation plan of debt replacement.Second,increase credit support for private enterprises,focusing on improving the financing constraints of private enterprises and large enterprises with poor profitability.Third,we should vigorously develop the direct financing market and reduce the dependence of enterprises on indirect financing channels of bank credit.Fourth,further divest the function of financing platform for government investment and financing,and promote the market-oriented transformation of financing platform.