Dynamic Mechanism Analysis of Local Public Debts Based on Financial Potential Theory

Abstract

Based on the financial potential theory, this paper uses the fixed effect model to explore whether there is a micro-dynamic mechanism of growth in local public debts, and analyzes its influencing factors. The following conclusions are drawn from the research: first, the scale of local public debts has a gradual growth trend under the effect of the “credit gravity” formed by asset extension and risk joint guarantee. At the same time, this “credit gravity” has spatial heterogeneity, but there is no temporal heterogeneity. Second, in the process of exploring the factors affecting financial potential, it is found that asset extension will directly amplify the impact of industrial structure on the scale of local public debts, while the real effective exchange rate, fiscal autonomy, financial explicit centralization and implicit decentralization use financial potential as intermediary variables to affect the scale of local public debts.