Local Government Debt and Green Total Factor Productivity-Empirical Evidence from Chinese Cities

Ke Mao; Pierre Failler

doi:10.3390/ijerph191912425

Local Government Debt and Green Total Factor Productivity-Empirical Evidence from Chinese Cities

Int J Environ Res Public Health. 2022 Sep 29;19(19):12425. doi: 10.3390/ijerph191912425.

Authors

Ke Mao^{1

2}, Pierre Failler³

Affiliations

¹ Business School, Xiangtan University, Xiangtan 411105, China.
² Business School, Hunan Institute of Technology, Hengyang 421002, China.
³ Economics and Finance Group, Portsmouth Business School, University of Portsmouth, Portsmouth PO1 3DE, UK.

Abstract

In recent years, the expansion of local government debt (LGD) in China has caused widespread concern. Enhancing green total factor productivity (GTFP) is an important way to coordinate resources, environment, and regional development and is an important indicator to realize the transformation of green economic development. Scientific assessment of the impact of LGD on GTFP helps promote the transformation of green economic development. This paper selects sample data from 271 cities in China from 2010 to 2019 and empirically investigates the mechanisms of LGD, green innovation, and financial market development on GTFP. The results show that (1) LGD expansion significantly suppresses GTFP in China; (2) green innovation mediates between the two, and LGD suppresses GTFP by reducing the level of green innovation; and (3) financial market development can mitigate the negative impact of LGD on urban GTFP. Therefore, the governance of LGD should be strengthened, the financial market environment should be optimized, the distortion of financial resources should be corrected, and innovative financing modes such as green finance and green credit should be encouraged to enhance GTFP.

Keywords: financial market development; green innovation; green total factor productivity (GTFP); local government debt (LGD).

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

China
Cities
Economic Development*
Efficiency
Local Government*

Grants and funding

This research was funded by the Hunan Province Philosophy and Social Science Planning Fund Project (grant number 18YBJ11) and jointly supported by the Hunan Provincial Education Department Excellent Youth Fund Project (grant number 20B165).