Abstract: This paper systematically explores the impact of local government debt scale on corporate financing structure based on the macroeconomic level of local government debt data and the micro level of corporate data. The empirical results show that the scale of local government debt significantly squeezed out the scale of debt financing. And the crowding out effect exists in both long-term government debt and short-term government debt samples, and is more significant in eastern and western regions. But local government debt obviously pushed up the level of corporate endogenous financing and equity financing.The implementation of PPP projects effectively alleviates the crowding out effect of local government debt scale on debt financing of enterprises. The empirical research further found that local government debt has different degrees of impact on the corporate financing structure through the investment environment. The local government debt has a significant impact on endogenous financing and equity financing by improving market openness and infrastructure level.

Key words: local government debt, financing structure, PPP project, investment environment