Impact of Anti-Corruption on the Sustainability of Local Government Debt in China: The Moderating Role of Fiscal Transparency

In the process of government management, officials may engage in rent-creation and rent-seeking within finance and debt management for personal gain, leading to corruption and jeopardizing government debt sustainability. Can anti-corruption effectively ameliorate this predicament? Based on the growing severity of global debt sustainability, 30 provincial-level administrative regions in China are used as research samples to explore the influence of China’s anti-corruption campaign targeting officials on local government debt sustainability and the moderating role of fiscal transparency. The results indicate that enhancing anti-corruption efforts will improve the sustainability of local government debt, while fiscal transparency will magnify this positive impact. Furthermore, regional heterogeneity analysis demonstrates that, in developed regions, the impact of anti-corruption on debt sustainability and the moderating impact of fiscal transparency have been bolstered by effective policy implementation. Our research findings not only unveil the influence of anti-corruption on local government debt sustainability and the crucial role of fiscal transparency, but also offer fresh insights to enable local government authorities to manage debt sustainably.