The paper "The Real Economy Promotion Effect of Fiscal-Financial Coordination: A Credit Creation Perspective" by Professor Yu Minggui from the School of Finance and his collaborators has been officially published in Economic Research (Issue 3, 2025). This journal is classified as an A+ category publication by Zhongnan University of Economics and Law.

Abstract

The Third Plenary Session of the 20th CPC Central Committee emphasized the need to coordinate reforms in key areas such as fiscal taxation and finance to improve the macroeconomic governance system. To strengthen fiscal-financial coordination, local governments have implemented the Government Procurement Contract Financing Policy (referred to as the "Government Procurement Loan" policy). This policy enables small and medium-sized enterprises (SMEs) to use future receivables from government procurement contracts as collateral for bank loans, while establishing a dedicated "government-enterprise-bank" account to ensure contract payments are directed toward loan repayment.Using the implementation of the "Government Procurement Loan" policy as a quasi-natural experiment, this study examines whether fiscal-financial coordination facilitates SME financing and promotes real economic development. The results show that the policy significantly increases bank loans to SMEs through credit creation effects. Furthermore, it notably enhances SME investment and employment.This research carries important policy implications: innovative fiscal-financial coordination can revitalize existing government resources, leverage credit creation effects, and support real economic development, achieving a tripartite win where the government incurs no additional fiscal burden, enterprises gain collateral, and financial institutions obtain secure assets. Therefore, future reforms should further develop collateral creation functions based on fiscal policies to channel financial resources into the real economy, while optimizing local government debt structures and addressing debt risks to foster healthy fiscal-financial interaction.

​​Keywords:​​ fiscal-financial coordination; collateral; credit creation; real economy promotion effect

Author Profiles

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​​Yu Minggui​​ is Dean and Professor of the School of Finance at Zhongnan University of Economics and Law, a doctoral supervisor, Lead Principal Investigator of Major Projects under the National Social Science Fund, and a recipient of the Ministry of Education's New Century Excellent Talent Award. His research focuses on digital finance, finance and artificial intelligence, corporate finance, and finance and innovation. He has published over 90 academic papers in leading domestic and international journals, including Economic Research Journal, Management World, The World Economy, China Economic Quarterly, Financial Research, China Industrial Economics, Accounting and Finance, Pacific-Basin Finance Journal, and Economic Modelling. He has presided over more than 10 major research projects funded by the National Social Science Fund and the National Natural Science Foundation of China.

​​Zhang Mengmeng​​, Ph.D. Candidate, School of Economics and Management, Wuhan University.

​​An Jianfeng​​, Ph.D. Candidate, School of Finance, Zhongnan University of Economics and Law.