Research on the Supply Chain Transmission Mechanism of Local Public Debt and Commercial Credit

Abstract

Following the 2008 global financial crisis, local governments in China massively borrowed through financing platforms to cope with downward economic pressure, leading to a rapid expansion of local public debt and the gradual emergence of hidden debt risks. Commercial credit, as a short-term financing model based on transaction trust within the supply chain, is a crucial support for alleviating corporate financing constraints and maintaining supply chain stability. The expansion of local public debt alters the allocation pattern of funds in the financial market through a credit crowding-out effect, thereby affecting the transmission efficiency of commercial credit in the supply chain, triggering adjustments in corporate credit policies and chain reactions throughout the entire chain. This paper, based on theories from public finance, finance, and supply chain management, systematically analyzes the scale characteristics and risk attributes of local public debt, delves into the transmission mechanism of commercial credit in the supply chain, focuses on analyzing the impact path of local public debt on the credit market and corporate commercial credit strategies, and proposes countermeasures to optimize the commercial credit transmission mechanism in the supply chain. The study finds that the expansion of local public debt increases corporate commercial credit demand by compressing credit supply, and this effect is more significant in SMEs and non-state-owned enterprises; the credit endorsement and information sharing of core enterprises in the supply chain are key carriers of commercial credit transmission, while the funding pressure caused by local debt can disrupt the stability of this transmission chain. This study provides theoretical support and practical reference for preventing the cross-sectoral spread of local debt risks and ensuring the security and stability of the supply chain.