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Theoretical and Empirical Analysis on the Formation Mechanism of China’s Debt Leverage
Author(s): 
Pages: 152-160
Year: Issue:  5
Journal: Nankai Journal(Philosophy,Literature and Social Science Edition)

Keyword:  Debt LeverageMonetary PolicyFinancial DevelopmentSupply-side Structural Reform;
Abstract: In recent years, the excessive debt leverage has become an significant threat to the stable operation of China’s economy and finance. The theoretical analysis based on the perspective of debt supply and demand shows that the formation and change of debt leverage depends on not only the debt generation and scale change brought by the monetary policy adjustment and the financial resource allocation function, but also the changes of the willingness of economic entities for financing and their debt sustainability in different macroeconomic environment during the cyclical cycle of economy. The empirical analysis shows that the increase in China’s debt leverage is mainly affected by the increase in money supply, the expansion of the financial system, and the decline in the economic growth rate and the profitability of the real economy sector. Moreover, interest rates, financial system structure and asset prices also have relatively less impact on leverage, but have a certain time lag. The conclusions of the study provide a reference for the rational formulation of the"de-leverage"policy.
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