Welcome to Francis Academic Press

Academic Journal of Humanities & Social Sciences, 2024, 7(1); doi: 10.25236/AJHSS.2024.070123.

Research on the Impact of Moderate Decentralization of Financial Power by Superior Governments on Local Economic Efficiency and Public Service


Rui Wu1, Pingfang Ming2, Jingxin Huang1, Yutong Li1

Corresponding Author:
Rui Wu

1School of Economics and Management, Hubei University of Science and Technology, Xianning, 437100, China

2School of Physical Culture, Hubei University of Science and Technology, Xianning, 437100, China


The article is based on a panel data model of 30 provinces in China from 2000 to 2020,and uses the System Generalized Moment Estimation(GMM)method to empirically test the impact of moderate decentralization of financial power by Chinese governments on economic operational efficiency. The results show that for every 1% increase in degree of decentralization of financial power by higher-level government,local economic efficiency will increase by 0.327%, confirming the positive role of moderate decentralization of financial power by higher-level governments. Under the premise of strict compliance with tax laws and the principle of "matching financial power,financial resources, and administrative power", the superior government moderately delegates a certain amount of financial power to local governments to re match financial and administrative power, which can mobilize the enthusiasm of local governments to develop and conserve tax resources, and ensure and enhance their ability to provide public services.


Superior government; Decentralize financial power; Local economic efficiency; Public service supply capacity

Cite This Paper

Rui Wu, Pingfang Ming, Jingxin Huang, Yutong Li. Research on the Impact of Moderate Decentralization of Financial Power by Superior Governments on Local Economic Efficiency and Public Service. Academic Journal of Humanities & Social Sciences (2024) Vol. 7, Issue 1: 147-157. https://doi.org/10.25236/AJHSS.2024.070123.


[1] Xinhua News Agency.In the No.1 central document of the Central Committee of the Communist Party of China in 2003,it proposed to do a good job in the key work of comprehensively promoting rural revitalization in 2023[EB/OL].https://www.gov.cn/xinwen/2023-02/13/content_5741361.htm.

[2] Zhu Deyun,Sun Ruoyuan.(2018)Long term dependence of local finance on transfer payments: theoretical mechanisms and governance options[J].Journal of Fiscal Research, (9):81-92.

[3] Wang Tong.(2022)From Tax Sharing to Tax Sharing: Theoretical and Practical Logic of Tax Sharing between Governments[J].Journal of the Central Party School of the Communist Party of China (National School of Administration), 26(1):78-86.

[4] Lv Wei,Wang Weitong.(2021)China's Inclusive Fiscal System:A Study Based on Non normative Income[J].Journal of Chinese Social Sciences, (3):46-64.

[5] Zhang Yong.(2016)The Collection and Decentralization of Power in the New Round of Financial and Tax System Reform[J].Journal of Tax Research, (7):40-44.

[6] Li Qiyun,Ma Wanli.(2012)Research on the Matching of Financial Resources and Powers between Governments under the Chinese Style Fiscal Decentralization System[J].Journal of Theoretical Studies, (11):38-43.

[7] Ma Haitao.(2009)Research on the Relationship between Intergovernmental Powers and the Division of Financial and Financial Powers[J].Journal of Theoretical Perspective, (10):31-35.

[8] Lou Jiwei.(2013)Rethinking on the Financial Relations between Chinese Governments[M].Beijing: China Financial and Economic Publishing House:267-274.

[9] Gao Peiyong.The New Round of Financial and Tax System Reform Must Adhere to the Tax Sharing System[N].Economic Information Daily,2013-07-05.

[10] Yang Zhiyong.(2015)Research on the Division of Central and Local Powers in the Reform of Tax Distribution System[J].Journal of Economic and Social System Comparison, (2):21-31.

[11] Hou Yilin.(2009)Government Functions,Powers,Responsibilities,and Financial Resources:A Theoretical Analysis of the Division of Financial Rights and Powers in China's Financial System Reform Since 1978[J].Journal of Public administration review, (2):36-72+203.

[12] Ni Hongri,Zhang Liang.(2012)Research on the Equalization of Basic Public Services and the Reform of Financial Management System[J].Journal of Management World, (9):7-18+60.

[13] Liu Shangxi.(2018)Three major preference issues need to be addressed in fulfilling administrative powers[J].Journal of Financial Sciences, (1):47-48.

[14] Fan Ziying,Zhang Jun.(2009)Fiscal Decentralization and the Efficiency of China's Economic Growth[J].Journal of Management World, (7):15-25.

[15] Yu Yongze.(2017)Reestimation of China's inter provincial total factor productivity from the perspective of heterogeneity:1978-2012[J].Journal of Economics (Quarterly), 16(3):1051-1072.

[16] G.E.Battese and T. J.Coelli.(1995)A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data[J].Empirical Economics, 20(2):325-332.

[17] Kumbhakar, S. C. and Lovell, C. A. K.Stochastic Frontier Analysis[ M].New York:Cambridge University Press, 2000:102-109.

[18] Zhao Weimin,Li Guanglong.(2016)Fiscal decentralization,vertical fiscal imbalance,and social expenditure efficiency[J].Journal of Contemporary Finance & Economics, (7):24-35.

[19] Chu Yuchun, Liu Jianping.(2009)Research on the Impact of Debt Financing on Manufacturing Business Performance: A Dynamic Panel Data Analysis Based on Generalized Moment Method Estimation[J].Journal of Quantitative Economic,Technical and Economic Research, (9):79-91