Last 10 years Mongolian Government and Central banks borrowed a huge amount of money from China. I want to study about influential factors and empirical research on debt cooperation between China and Mongolia. Because Mongolian external debt is increasing by every year, we are facing problems that a huge amount of money back pay. Today Mongolia’s loans borrowing from Republic of China equals 33 percent of GDP. China is the most important investing country for Mongolia. For this reason, this topic is much interesting to me. My purposes of this research is to define the influential factors on debt cooperation between China and Mongolia. I have achieved purposes of my thesis, I used OLS regression method. I also built two model on this paper. In open economy, defining Mongolian foreign loan is based on simple model (Financial depth, GDP and others). It involved hypothesis that Mongolian loan has impact on these variables in the short term. Hence, linear expressions of variables are able to measure the impacts of Mongolian foreign loan. In the first model, dependent variable is debt that Government of Mongolia and Central bank borrowed from China. In Second model, dependent variable is debt that Commercial bank of Mongolia borrowed from China. The equation results, the change in volume of debt that Government of Mongolia and Central bank borrowed from China is depending on the following variables such as Mongolia’s and China’s GDP growth, Mongolia’s and China’s financial depth, the M2 money-to GDP ratio, and net export. The change in volume of debt that Commercial bank and other sector’s borrowed from China is depending on the following variables such as China’s GDP growth, Mongolia’s and China’s financial depth, the M2 money-to GDP ratio, and net export.

Keywords : GDP; Debt; Mongolia; M2; Financial Depth.