An Empirical Study on the Relationship Between Local Penalty Intensity and Regional Differences Under Fiscal Pressure: A Case Study of Food Enterprises in Prefecture-Level Cities in China (2017-2022)

Abstract

In recent years, with the slowdown of China’s economic growth, fiscal pressure on some local governments has intensified. As a potential effective measure to offset financial deficits, local governments have increased incentives to boost penalty revenues to alleviate fiscal pressure, leading to a frequent occurrence of ‘excessive fines for minor violations’ in the food sector, contrary to the central government’s intention to support enterprises. The level of regional development, as a key regional characteristic variable, is assumed to have a certain correlation with the revenue from food forfeiture. Based on the panel data of 27 prefecture-level cities from 2017 to 2022, this paper employs the moderating effect model and the lagged regression model to investigate the relationship and mechanisms between the regional development level and the local penalty strength of food violation enterprises and the influence mechanism, and verify the lagged effect of the regional development level on the penalty strength. The study shows that: regional food confiscation revenue and the level of regional development is indeed negatively correlated, there is a certain degree of lag, regional financial self-management ability has a significant moderating effect on this effect. The results and conclusions can assist the central government in identifying key areas for remediation, reducing costs, and providing policy recommendations for more effective supervision.