The Influence of Fiscal Transparency on Financial Capital Allocation Efficiency

Li Dan, Pei Yu

Journal of Finance and Economics Vol. 42, Issue 02, pp. 40 - 49 (2016)  DOI:10.16538/j.cnki.jfe.2016.02.004

Abstract

Based on the provincial governments (municipalities and autonomous regions) in China, this paper establishes a panel regression models and employs FGLS and two-stage system GMM method to analyze the effect of fiscal transparency on financial capital allocation efficiency in detail. Based on the study of the efficiency of fiscal expenditures, fiscal transparency does not improve financial capital allocation efficiency; based on the study of the structure of fiscal expenditures, fiscal transparency is beneficial to the spending on social security and employment per capita, but does not have a significant impact on other livelihood expenditures. Based on theoretical and practical study, this paper argues that at present fiscal transparency does not have a substantial effect on financial capital allocation. Therefore, in future China should further enhance financial transparency and thoroughly implement the new "Budget Law" in order to improve the allocation efficiency of financial capital.

Keywords

financial transparency; financial capital allocation; the structure of fiscal expenditures