Abstract:
This paper explores the role of financial markets and fiscal institution design in controlling the risk of local government debt in perspective of Chengtou bonds' risk premium. By taking the 2014 “self-issuing self-paying” pilot implementation as a natural experiment, we employ a difference-in-differences model to identify if market discipline can lower the risk premium of Chengtou bonds. Furthermore, market discipline is more effective in places where the fiscal transparency is higher, and less effective in presence of fiscal imbalance. We conclude that fiscal imbalance and low fiscal transparency weakens the market discipline efficiency. These results have important implications: only relying on market discipline can not lower the risk of local government debt effectively, the key is to improve the efficiency of fiscal institutional arrangement.
朱莹, 王健. 市场约束能够降低地方债风险溢价吗？——来自城投债市场的证据[J]. 金融研究, 2018, 456(6): 56-72.
ZHU Ying, WANG Jian. Can Market Discipline Affect Local Government Bonds' Risk Premium？Evidence from the Chengtou Bond Market. Journal of Financial Research, 2018, 456(6): 56-72.
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