A Study On The Risks Of China’s Local Government Investment And Financing Platform

The local government investment and financing platform（LGIFP） has played animportant role in promoting urban infrastructure construction, expanding industrialdevelopment, and expanding domestic demand. But under the present system of localgovernment investment and financing platform operation also exists a risk, such as thecapital of operational risk, financial risk, policy risk, competition risk, etc. This paper aimsto conduct systematic research seeks to explore the formation and conduction of riskinherent logic and the root causes and identify effective methods of risk prevention andcontrol LGIFP risks.Firstly,it puts forward the studying train of thought, methods, content on the basis ofanalyzing the background and significance of choosing the topic and making comments onthe domestic and overseas. Study on evaluating the LGIFP.It analyzes the theoretical basisof the LGIFP for risk research, such as fiscal decentralization theory, stakeholder theory,principal-agent theory, corporate governance theory and risk management theory, etc.Secondly, it identify the root causes of the system of LGIFP risk.The risk comes fromthe "tax sharing" under the central and local financial authority and powers of theasymmetric three authorization of state-owned assets management system, an internalsystem of governance, external regulatory system is not perfect and so on. It points out theLGIFP risks to financial risks, financial risks, macroeconomic risks and social stabilityrisk the possibility of conduction channels, reveals the risk generation mechanism.Thirdly,it combines the practice case of the national local government investment andfinancing platform.By using the method of literature, the list of risks to identify the fivefirst-level risk indicators and18second-level risk indicators, including strategic risk,operational risk, market risk, financial risk and legal risk.Fourthly, it analysis of fuzzy comprehensive evaluation based on the basic principles, itconstructs the fuzzy comprehensive evaluation model the local government and designfinancing platform risk fuzzy comprehensive evaluation system. With Hubei Province fiveprovincial and local government financing platform management as the research object of risk management, evaluation of the conclusions drawn, it finds out the influence andrestriction of local government financing platform operation key factors.Fifthly,it uses the principle of risk warning, risk early warning mechanism, earlywarning system process of design of the LGIFP. Sets up a risk warning model, design ofearly warning indicator system and the main indicators, points out that the early warningsafeguard measures.Lastly, it put forward both external risk control and external risk control strategies forthe LGIFP. Proposed security measures, including the risk control of the local governmentinvestment and financing platform to improve the tax system, improve the local debtmanagement system, reform of the platform of financing, to improve the legislativeenvironment.