Research On Early Warning System Of Financial Risk For University

As China’s higher education reform and develop in recent years, colleges haveentered a super-conventional and large-scale borrowing sponsoring stage. The speedof its expansion and fierce competition is indeed unprecedented. Due to financialgrants and other financing channels limited, bank credit has become a very importantway for the colleges to get rapid expanding and basic construction. Most colleges getinto debt in operating, there comes the problem of university financial risk, which hasbecome a hidden danger in the long-term development of universities. It’s veryimportant and meaningful to establish early warning system of college financial riskand control it. Therefore, Shanghai Education Committee accepted the application ofthis scientific research project and established it in2010.This paper is the researchfruit of it.This paper starts with studying the deep-seated reasons for college to borrowfrom the bank, including university funding sources, funding mechanism andprofit-driven of different behavioral agents such as country (Ministry of Education),banks and universities and so on. In the meantime, this paper analyses thecharacteristics of the financial risk of higher school. On this basis, it combines withChina’s national conditions and proceeds its analysis based on financial risks of highereducation in our country, thus the financial risk alarming system according toanalytical hierarchy process (AHP) and efficacy coefficient method from theperspective of management authorities in colleges., aimed at the characteristics of thefinancial risk of higher school, is constructed. Based on these data, it helpsmanagement authorities in colleges to understand timely universities’ debt andfinancial risk level, targeted formulate corresponding policies and take correspondingmeasures in order to timely stop further deterioration of financial risk in colleges.Finallythis paper collects financial data and early warning index system of eightcolleges in Shanghai and one college in Jilin province from2003to2011to doempirical analysis in order to test the reliability and validity of the system. Then itconducts scientific assessment about financial risk level of sample colleges. Thesefinding suggests that the financial risk level in Shanghai’s college during2003-2011remained low-risk and non-risk, but the financial problems of the college in Jilin arevery prominent during2003-2010.Its financial risk level continued to be high.However, its risk level turnedto be low in2011.With the implementation of resolvingthe massive debt of the country’s finance since2011, the school’s financial risk hasimproved, thus verifies the feasibility and validity of financial risk alarming systemestablished in this paper. According to these analytical results, we make someinstructive and feasible proposals for the improvement of financial management ofhigher education, and provide the basis for the policymakers of the administrationsection of higher school.