Local Debt and Green Development Efficiency of Enterprises

Abstract

Abstract: Balancing economic development and environmental protection and establishing a government debt management mechanism that aligns with high-quality development is an inherent requirement for advancing Chinese-style modernization. This paper uses data from Chinese A-share listed companies from 2008 to 2022 and employs a multi-dimensional fixed-effect model to explore the mechanism of how local debt influences the green development efficiency of enterprises. The research finds that an increase in the local debt ratio significantly suppresses the green development efficiency of enterprises. For every 1% increase in the local debt ratio, the average green development efficiency of enterprises decreases by 0.169%. Moreover, this inhibitory effect is more pronounced for enterprises in cities with higher local government bond debt ratios and higher reliance on land finance, as well as for private enterprises and technology-intensive enterprises. Mechanism analysis indicates that an increase in the local debt ratio intensifies financing constraints and tax and fee burdens on enterprises through the occupation of credit resources, strengthened tax and fee collection and management, and misallocation of green investment, thereby weakening long-term green innovation momentum and reducing the green development efficiency of enterprises. Further analysis incorporating dual economic and environmental policies reveals that flexible economic growth targets and strong environmental supervision can help mitigate the negative impacts of rising local debt ratios. This paper enriches the research on the mechanism and consequences of local debt influencing micro-enterprises from the perspective of green development efficiency, providing theoretical basis and policy implications for further deepening the reform of the local debt management system and effectively enhancing the green development efficiency of enterprises.

Key words: local debt, green development efficiency, credit crowding-out, tax and fee burden, investment misallocation

Su Xiao, Qiao Ruiyun, Xu Shengyan, Wu Yue. Local Debt and Green Development Efficiency of Enterprises[J]. Management Review, 2026, 38(7): 191-204.

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