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

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  • Ke Mao

    (Business School, Xiangtan University, Xiangtan 411105, China
    Business School, Hunan Institute of Technology, Hengyang 421002, China)

  • Pierre Failler

    (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.

Suggested Citation

  • Ke Mao & Pierre Failler, 2022. "Local Government Debt and Green Total Factor Productivity—Empirical Evidence from Chinese Cities," IJERPH, MDPI, vol. 19(19), pages 1-13, September.
    • Handle: RePEc:gam:jijerp:v:19:y:2022:i:19:p:12425-:d:929113
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    References listed on IDEAS

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    1. Yongquan Zhao & Ziwei Zhang, 2023. "Distribution of Spatial and Temporal Heterogeneity of Green Total-Factor Productivity in the Chinese Manufacturing Industry, and the Influencing Factors," Sustainability, MDPI, vol. 15(4), pages 1-15, February.

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