Research Findings of Professor Li Yihua and Doctoral Student Li Linwei Published in Journal of Financial Research

Recently, the paper Debt Restructuring and Local Government Moral Hazard, co-authored by Professor Li Yihua and doctoral student Li Linwei from the School of Economics, Shandong University, was published in Issue 3, 2024 of Journal of Financial Research, a top domestic journal in economics.

Using the relative estimation method and dummy variable method, and based on the replacement bond data of 241 cities from 2015 to 2018 obtained through application for disclosure, the paper empirically studies the impact of debt replacement on local government moral hazard and its economic consequences. The study finds that debt replacement leads to an increase in the excessive debt level of financing platforms, especially the more serious short-term debt risk. The change in local government moral hazard is significantly affected by regional economic development level, the scale (efficiency) of new special bonds and government guarantee resources. Economic consequence research finds that debt replacement has a negative impact on local fiscal sustainability by increasing the excessive debt level of financing platforms. This paper provides new empirical evidence for summarizing the experience and lessons of debt replacement and deepening local government debt management, and can provide policy implications for establishing a long-term mechanism to prevent and resolve local government debt risks.

Li Yihua is a Professor and doctoral supervisor at the School of Economics, Shandong University, a researcher at the National Governance Research Institute, and Director of the Shandong University Budget Supervision Research Center. She has long been engaged in research on local public finance and local government debt. She has published more than 80 papers in journals such as Finance & Trade Economics, Reform, and Economic Theory and Business Management, and many think tank results have received affirmative instructions from the main leaders of the provincial government and the Standing Committee of the Provincial People’s Congress, and been adopted by the General Office of the CPC Central Committee. She has presided over 7 national and provincial/ministerial-level projects such as the National Social Science Fund, and more than 10 university-government cooperation projects. She has won the second prize (second completer) of the "Outstanding Achievement Award for Humanities and Social Sciences Research in National Ordinary Colleges and Universities" by the Ministry of Education.

Li Linwei is a doctoral student at the School of Economics, Shandong University. His research field is local government debt management. He has published 7 papers in journals such as Public Finance Research, Finance & Trade Economics, and Comparison of Economic and Social Systems, and participated in 2 major provincial soft science projects.