Fiscal Decentralization,Local Deficit Financing and Land Finance

Abstract

From the perspective of local deficit financing,this paper tries to expound the internal logic between fiscal decentralization and local government 's land finance. Theoretical analysis shows that: fiscal decentralization in China aggravates local deficit financing, and the latter becomes an incentive for local governments to grab offbudgetary financial revenue, which will impel them to take active land finance strategy to increase local fiscal revenue. At the same time, our empirical test among them using provincial panel data shows that fiscal decentralization and local deficit financing both have obvious positive driving effects on land finance. Finally, we put forward a series of suggestions on land finance governance respectively from the following 5 aspects: deepening tax distribution reform, improving local fiscal revenue structure, changing land finance formation mechanism, promoting administrative performance evaluation mechanism and strengthening budget supervision.