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ORIGINAL RESEARCH
Local Fiscal Imbalances and Pollution Emissions:
Assessing the Vice Role of Local Government
Debt in China
1
School of Economics, Jinan University, Guangzhou 510632, Peoples R China
Submission date: 2024-04-01
Final revision date: 2024-05-26
Acceptance date: 2024-06-23
Online publication date: 2025-01-24
Publication date: 2025-06-06
Corresponding author
Pol. J. Environ. Stud. 2025;34(4):4843-4857
KEYWORDS
TOPICS
ABSTRACT
Local government debt (LGD) has a crucial impact on the development of the economy. However,
the vice effects of local government debt bonds have also garnered attention in recent years. Local
governments lead the improvement and governance of regional pollution emissions. Therefore,
understanding the influencing mechanism of local government debt on the regional environment can
help us better comprehend the role of local government bonds. Using panel data on corporate pollution
emissions and local government debt in China from 2006 to 2013, we investigate the relationship
between local government debt and pollution emissions from enterprises. Our research suggests that
local government bonds have a U-shaped effect on firms’ pollution emissions. (2) The level of local
debt can impact the fiscal spending capacity of local governments, which in turn affects local pollution
emissions. (3) Local government debt impacts the environmental governance of non-state-owned or
financially constrained firms. This demonstrates that local government bonds can affect the government’s
fiscal capacity. (4) Local government debt can impact the governance of local governments, potentially
leading to relaxed regulations on corporate pollution emissions when faced with debt pressure.
CONFLICT OF INTEREST
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
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| eISSN: | 2083-5906 |
| ISSN: | 1230-1485 |
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