The Korea Local Administration Review

The purpose of this study is to empirically examine the impact of ordinary grant taxes and state subsidies on the issuance of local bonds. In order to achieve the purpose of the study, statistical data from 2013 to 2019 of autonomous cities among basic local governments were used. State subsidies and ordinary grant taxes were designated as independent variables, while local bonds were designated as dependent variables. State subsidies were classified into social welfare subsidies and subsidies excluding the social welfare sector, considering that different results may occur depending on the nature of the subsidy project. The model of this study used panel Tobit regression analysis. As a result of the analysis, it was analyzed that the common grant tax and state subsidies in the social welfare sector among the relocation funds of the central government had a negative effect on the issuance of local bonds by local governments. On the other hand, it was analyzed that state subsidies excluding the social welfare sector had a positive effect on the issuance of local bonds by local governments.