What Drives Fiscal Transparency? Evidence from Provincial Governments in China

Abstract

What drives fiscal transparency? Using a unique dataset we empirically examine the determinants of fiscal transparency of provincial governments in China. We propose an integrated framework to explain the variation in fiscal transparency, in which external demand and pressure, fiscal performance, government resources and capacity, as well as top leaders’ attributes are argued to play important roles. Fiscal transparency is measured by governments’ responses to open fiscal information requests of citizens and their information availability and completeness. Our findings show that economic openness, marketization, institutional capacity, and attributes of local leaders (e.g., tenure) are key drivers of fiscal transparency, and their effects on responsiveness and information completeness are slightly different. We compare our findings with research results on other countries, and theoretical and policy implications are also discussed.

Keywords: Fiscal Transparency, Provincial Governments, China