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In the urbanization accelerated stage, one country inevitably faces the problem of local government's financing. From the fiscal tax-sharing system reform in 1994, which financing style is proper for dealing with the difficulty of capital gap is an important problem for local government to consider. In the kinds of financing styles of local government used in China,"Chinese bundling loans"is once time a very popular financing style. However, as an innovated financing type,"Chinese bundling loans"has been in the dispute discussion, researchers, local government and regulators have different views about it. Until now, the dispute mainly focused on the characters, process and background of"China bundling loans", there is few research on the institutional process and risk management, and monographs about the historical rationality.This paper analyzes the positive significance of"Chinese bundling loans"and researches the various risks of it by using institutional, historical and comparative analysis method. The paper tries to review the history of appearance, development and prohibition of"Chinese bundling loans"with institutional theory and method, and analyzes the existence rationality, objectively evaluates its advantage and variability. Discussing the risk of"Chinese bundling loans"is another view of the paper. Based on the theory and methods of risk management the paper estimates the risk and supply the manage suggestions. This paper also has one chapter to analyze and compare the differences about the local government financing platform between China and foreign countries. Therefore, this paper considers that as a financial innovation in the specific history period,"Chinese bundling loans"has positive significance not only on promoting the country's urbanization process and building market credit system, but also on enriching financial creation paths. In the end, the paper supplies some suggestion on how to standardize the development of"Chinese bundling loans", keep away its risk and promot local government platform's creation.This paper includes introduction, four subject contents chapters, conclusion and suggestions. The main contributions of this paper are as following five aspects:Firstly, this paper sets an institutional economic analysis framework about"Chinese bundling loans". Based on the theory of new institutional economics about the institution and institution change, the tax-sharing system reform ,China Development Bank's political positioning after China's financial system reform, China's macro-control policies'adjustment after Southeast Asia financial risk in 1998 are all the institutional foundation of appearance of"Chinese bundling loans". The appearance is an inevitable demand to conform to China economic development. Also, the prohibition of"Chinese bundling loans"is corresponding with the change of China macro situation and supervision policy in the early 21st century.Secondly, the paper definitely affirms the positive significance of"Chinese bundling loans". As an important combination of government regulation and market mechanism, policy finance is an indispensable part in developing China economic. Because of its policy and financial characters,"Chinese bundling loans"has many advantages which other financing tools such as the capital market financing, city construction investment bond, trust tools and etc. do not have. The importance of"Chinese bundling loans"on promoting local economic development is indelible.Thirdly, the paper estimates the risk of"Chinese bundling loans"and supplies the management suggestions. Because of close relation with local government,"Chinese bundling loans"has prominent credit risk in micro filed, and has specific risk as institutional risk caused by government credit and local fiscal risk except the general risk as business and financial risk, moral risk, policy and legal risks and etc. In macro filed, the local debts caused by"Chinese bundling loans"also should be noted.Furthermore, the paper discusses the function and problems of local government financing platform objectively. For there are no unified standards of establishment, lacking effective norms and constraints, China local government financing platform's development appears many problems. Materials about local government's total financing liability scale can not be fully grasp, this also caused great difficulties for commercial banks to accurate evaluation of local governments, and forecast the local government financing platform's real reimbursement ability. However, as a important means to break government financing bottleneck, and a carrier of"Chinese bundling loans", it is no doubt that local government financing platform's establishment and development have lots of positive meaning. The key to solve current problems should be improving the local government debt statistics system, increasing the local fiscal transparency; and further standardizing government financing platform development. At last, the paper indicates that the reasonable strategy to deal with the problem of"Chinese bundling loan"is standardizing and inducting not prohibiting."Chinese bundling loans"as a kind of financial innovation, it plays a tremendous role in meeting local government financing needs, promoting the country's urbanization process and building market credit system, promoting local economic development, so we cannot comprehensively negate the meaning of its existence. Based on China's current development stage, it seems more important that standardizing and inducting"Chinese bundling loans"to play a bigger role than prohibiting it.