Transition Period Of Local Government Investment And Financing Behavior Of Economic Studies

The 2008 global financial crisis as a turning point in the economy. Our country can not immune from serious financial crisis, central government use "4 trillion" economic stimulus plan to achieve the expansion of domestic demand and stability in the economy. But in the current financial system, the central government will actually put 1.18 trillion yuan of financial funds, the rest largely by the local government and social capital to resolve. Active in social capital is not high, local governments need to resolve most of money. In the case of constrained by the system, the local government usually use the method of integrating the existing resources, and establishment of local investment and financing platform to solve this problem. This makes the number of local government investment and financing platform in 2008 mushrooming surge.It should be noted, the platform was not a new product produced after 2008, and its investment and financing of local government has long played an important role. The platform has experienced 20 years of development, it was budding since 20th century, established in 1994 to 2002 "Chongqing Model", then to the great development in 2008. It can be said that the local government investment and financing platform is a product of continued game of our current political system and economic system, it is not only an innovation belonging to the local government but also a typical behavior of local government financing.However, most of the "occasional" and the platform which is "stimulus" by local government caused widespread concern in the market. Because of the central government policy and the financial institutions'"race for results",large number of low-level platforms, a purely financial "shell" and poor market efficiency platforms be produced.Under the double internal mechanism motivation of local government, the investment and financing platform exists unperfect structure, non-standard loans, lack of supervision, even the local government is illegal to guarantees or deficit. It's making the risk of project proceeds to the platform of the repayment of transmission risk, and then passed to the local government fiscal risks, and then expand the credit risk for financial institutions, platform seems to be the source of many risks. The current literature about investment and financing behavior of platform and local government isn't more. As the market economic development different, foreign investment and financing models and research methods are not fully suitable for China's national conditions, but also with the actual government debt criteria analysis; domestic current of mostly single-level, or the role of local government investment research, or on government deb indicator system to explore, or is the platform for qualitative risk analysis. In this paper, we firmly grasp the word of "behavior", take a western area of the city as local government investment and financing behavior of objects, based on the high degree consistency of conduct of platform and local governments, this paper not only analyzes the macro behavior of the local government's external finance utility and internal debt burden, but also within the platform investment and financing conditions and risks were analyzed, through the macro and micro empirical, results will be linked to systematic.The analysis of context in this paper is from the current local government investment and financing behavior theory, on the basis of literature review, the local government investment and financing platform as a micro-study, from the macro and micro level analysis of local government investment and financing behavior. Based on the theoretical analysis, we construct the three assumptions, and empirical analysis of data collected through testing the corresponding results. This paper argues that:(1)The current local government investment conducive to regional economic development; (2)The local government finance will have to some extent "squeeze effect", but the local government's debt accumulation will adversely affect local economic development, under the existing financing model, the amount of financing risk will be gradually increased with the financing increases;(3)Under the strong support of local government, sample platform has strong short-term financial ability, but has greater financial risk, it means lower viability. Empirical basis for this conclusion, this paper proposal that a thorough inventory of the debt situation of the national platform, platform consolidation above the city level; prohibits the establishment of county level local government investment and financing platform, reform the single-function and inefficient financing platform; non-commercial bank offering loans to the platforms. The innovation of this paper is reflected in:(1) the use of World Bank's debt statistical methods with actual conditions, calculate the amount of local debt in industry, and build the index analysis; (2) through the financial deterioration of the indicators measure the actual financial risk profile platform; (3) to contain risk and improve returns from the angle of two short and long term strategies.Of course, to be fair, although the local government investment and financing platform in China producing many problems, but can not deny that the local governments' system innovation to promote regional economic development and social progress. So based on the conclusions above, we propose that more investment and financing platform for the city should reform and rationalized to run the model, governance model, mechanisms to protect the other aspects of the, so as to better serve the regional economy.