{"title":"The crowding out effect of local government debt expansion: Insights from commercial credit financing","authors":"","doi":"10.1016/j.eap.2024.07.001","DOIUrl":null,"url":null,"abstract":"<div><p>Understanding the impact of local government debt expansion on microeconomic entities is crucial in evaluating local government debt policies. This study explored the crowding-out effect of local government debt on firms' commercial credit financing. We found that local government debt plays a crucial role in enhancing corporate commercial credit financing by exacerbating the financing constraints faced by firms. Second, the impact of local government debt on commercial credit financing is more pronounced for firms with lower leverage and a more stable capital chain. Third, state-owned enterprises (SOEs) are more susceptible to the impact of local government debt on commercial credit financing compared to private enterprises. And the crowding-out effect of local government debt on firms' commercial credit financing is more pronounced in the regions where the credit market regulation is relatively weaker. Our findings provide valuable insights that can contribute to the reform of the local government debt management system.</p></div>","PeriodicalId":54200,"journal":{"name":"Economic Analysis and Policy","volume":null,"pages":null},"PeriodicalIF":7.9000,"publicationDate":"2024-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Analysis and Policy","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0313592624001681","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Understanding the impact of local government debt expansion on microeconomic entities is crucial in evaluating local government debt policies. This study explored the crowding-out effect of local government debt on firms' commercial credit financing. We found that local government debt plays a crucial role in enhancing corporate commercial credit financing by exacerbating the financing constraints faced by firms. Second, the impact of local government debt on commercial credit financing is more pronounced for firms with lower leverage and a more stable capital chain. Third, state-owned enterprises (SOEs) are more susceptible to the impact of local government debt on commercial credit financing compared to private enterprises. And the crowding-out effect of local government debt on firms' commercial credit financing is more pronounced in the regions where the credit market regulation is relatively weaker. Our findings provide valuable insights that can contribute to the reform of the local government debt management system.
期刊介绍:
Economic Analysis and Policy (established 1970) publishes articles from all branches of economics with a particular focus on research, theoretical and applied, which has strong policy relevance. The journal also publishes survey articles and empirical replications on key policy issues. Authors are expected to highlight the main insights in a non-technical introduction and in the conclusion.