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Optimizing Government Debt Structure and Alleviating Financing Constraints: Access to Private Enterprises’ Sustainable Development

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  • Wenda Sun

    (School of Finance, Southwestern University of Finance and Economics, Chengdu 610074, China)

  • Genhua Hu

    (School of Business, Anhui University of Technology, Ma’anshan 243032, China)

  • Tingting Zhu

    (School of Business, Anhui University of Technology, Ma’anshan 243032, China)

Abstract

To promote the deepening of reform and the effective implementation of policies, the State Council launched the special supervision of the liquidation of local governments’ arrears in project funds in 2016, which supports the optimization of the government debt structure. Based on the quasi-natural experiment of the special supervision action, in this study, we use the difference-in-difference (DID) method to investigate the effect and mechanism of the optimization of the government debt structure on the financing constraints of private enterprises. This research is particularly relevant for private enterprises, which face acute financing challenges and are critical for promoting inclusive economic growth, employment, and innovation—key pillars of sustainable development. The results are as follows. Firstly, the special supervision significantly reduces the financing constraints of private enterprises. Secondly, it has heterogeneous effects on the financing constraints of different types of enterprises, and the alleviating effect is particularly significant for enterprises that rely on the funding support of local governments. This highlights the importance of institutional reforms in fostering equitable access to financial resources for vulnerable enterprise groups such as private enterprises. Thirdly, the optimization of the government debt structure eases enterprises’ financing constraints by improving their capital turnover and trade credit. By enhancing liquidity and creditworthiness, these changes create a more resilient financial environment for private enterprises, supporting their long-term development and contribution to sustainable economic systems.

Suggested Citation

  • Wenda Sun & Genhua Hu & Tingting Zhu, 2025. "Optimizing Government Debt Structure and Alleviating Financing Constraints: Access to Private Enterprises’ Sustainable Development," Sustainability, MDPI, vol. 17(14), pages 1-24, July.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:14:p:6509-:d:1702752
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    References listed on IDEAS

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    1. Shi, Jinyan & Yu, Conghui & Li, Yanxi & Wang, Tianhe, 2022. "Does green financial policy affect debt-financing cost of heavy-polluting enterprises? An empirical evidence based on Chinese pilot zones for green finance reform and innovations," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    2. Toni M. Whited & Guojun Wu, 2006. "Financial Constraints Risk," The Review of Financial Studies, Society for Financial Studies, vol. 19(2), pages 531-559.
    3. Parise, Gianpaolo, 2018. "Threat of entry and debt maturity: Evidence from airlines," Journal of Financial Economics, Elsevier, vol. 127(2), pages 226-247.
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