Under the general work guideline of making progress while maintaining stability, the importance and concern of local government debt risk issues are increasing. In order to alleviate the local government debt crisis, the central government has issued a number of important documents. Due to the active and continuous borrowing motives of local governments and the tendency to conceal debt behavior, the central government’s " top-down” macroeconomic control measures have little effect. Fiscal transparency is a broad " bottom-up” public monitoring tool that can effectively promote public supervision and restraint on government behavior. It has a positive and effective effect on controlling corruption, improving government credibility, and reducing debt risks.

Firstly, this paper constructs a theoretical model based on game theory. The theoretical model uses the motive of local governments as the entry point to analyze how fiscal transparency will restrict local governments’ illegal debt-raising behavior. The results of the theoretical model show that: （1）With a single local government as the main player of the game, the increase in fiscal transparency will increase the expected cost of local governments’ illegal borrowing, thereby reducing the amount of illegal debt.（2）Taking two representative local governments with competitive relationship as the main players, the increase of fiscal transparency has a controlling effect on the illegal borrowing caused by inter-governmental competition. As the degree of fiscal transparency increases, the competing government will abandon the illegal way of borrowing and instead choose the legal way of borrowing.（3）With the central and local governments in the context of " Paternalism” as the main players, the improvement of fiscal transparency can strengthen the central government’s commitment to not help local governments, and encourage local governments to actively converge on illegal debt-raising in order to avoid the debt crisis.

Secondly, this paper constructs an empirical model based on provincial panel data to analyze the " external performance” of the impact. The results of the study show that: （1）Improving fiscal transparency can effectively reduce local governments’ illegal borrowing impulses.（2）" Political tournaments” and " soft budget constraints” will exacerbate local governments’ debt impulses. In this context, improving fiscal transparency can effectively curb local governments’ debt impulses.（3）Improving fiscal transparency can encourage local governments to optimize their debt structure and optimize the bond issuance process.

In the context of the current wide-ranging concern of local government debt problems, this paper aims to study the problem of local government debt risk control from the perspective of improving fiscal transparency. This paper provides new ideas for controlling local government debt risks, and also provides useful enlightenment for effectively promoting China’s fiscal transparency.