The Research On Risks Of Railway Investment And Financing

Railway is the main artery of the national economy and critical infrastructure,which has a profound impact on the economic and social development of all countries in the world.The famous Pacific Railway has made great contribution to the rapid development of American economy,and it in a certain extent brings achievements of modern America.From an international perspective,along with economic globalization,regional integration and the emerging energy crisis,environmental pollution,traffic safety and other issues,the comparative advantages of the railway is further highlighted,and the United States recently had launched a railway revival plan,the recovery of rail way development is spreading all around the world.Current China Railway construction also continues to accelerate,repeatedly refresh the construction plan.At the end of 12 th Five-Year plan,China’s railway operating mileage reaches 121 thousand kilometers,of which the high-speed rail has 19 thousand kilometers.Continuous development and improvement of the railway network,especially high-speed railway construction,has brought convenience to the public,as well as providing support for the rapid economic development.Under the background of Steady growth and the structural adjustment,the railway investment can have effective consumption of excess production capacity,promote national industrial upgrading,which is a development important way in stimulating economic at period of time in the future and belongs to seven categories of national support major engineering package.According to the initial formulation of the National Railway Bureau of the 13 th Five-year railway construction plan,China will invest 2.8 trillion yuan to build 2.3 million kilometers railway in the 13 th Five-year period.China’s railway investment will remain at a high level.In the macroeconomic background of the country to accelerate the railway construction,some industry experts and scholars estimate that the investment in railway may be up to 4 trillion in the 13 th Five-year period.Although in the past two years through initiated the establishment of railway development fund,the National Development Bank special construction funds support in policy and funds are to the railway construction tilt,but,the key to the sustainable and healthy of China’s railway development lies in the railway investment and financing to scientific,standardized and reasonable.It brings opportunities as much attention has been paid to the development of railway construction,but it also brings the risk.Opportunity is what we expect,but we also have to face the risk.Generally speaking,there are risks at the procedure of investment and financing in any field,we can through the effective management of risks,so as to choose the prevention,reduction,decomposition,transfer or accept the risk,but the risk can’t be ignored.Historical experience shows that the consequences of not paying attention to management risk may even be disastrous.Qing Dynasty due to the lack of national financial resources,the construction of the railway use of private capital,foreign borrowing,public-private partnership model,but it failed at the end.In the Qing Dynasty society as a whole lack of contract spirit and legal constraints,the Qing government to the railway reverted to the state-owned,but and it can’t full refund and compensate the nongovernmental investment shares,it brings the strongly local opposition,then it caused the demise of the Qing Dynasty of the Railway Project Crisis.To some extent,the ignorance of the Qing government on railway investment and financing accelerates its contempt toward extinction.Before the reform of separating government functions from enterprise,the former Ministry of Railways in general is responsible for the railway investment and financing.In addition to direct government financial resources,it mainly relays on large-scale bank loans and issue of Railways debt bonds and other debt to meet huge railway construction fund demand.In China’s market-oriented reforms to promote public projects policy background alone financial investment plus debt financing of traditional methods t can’t meet the huge demand for funds for railway construction,and it can’t effectively resolve the debt risk of investment and financing.In the invisible government credit guarantees,banks and other financial institutions with little regard for financing risk.Government,railways investors,the public also do have full awareness the risks,and it is believed that the government is responsible for investment and financing,construction,operation,and taking the risk,which is equivalent the risk to sovereign credit risk or even taking for sure that there is no risk of railway investment and financing.Such mistaken ideas led to the mismatch of the powers and responsibilities in railway construction and operation,so that railway investment and financing has great hidden risks.In fact,the railway investment and financing is of large scale and long duration of the project,involving multiple parties,of several risk factors,so in fact the risk is relatively large.Therefore,the railway investment and financing risk is a problem can’t be ignored.As an important transport infrastructure and the main artery of the national economy,the railway plays an important role for national economic development.However,the current rapid development of the railway also brings problems.There is no sufficient attention for railway investment and financing risks.The more high-growth period of railway investment scale,the more attention should be paid to railway investment and financing risks,and effective management.This has important implications for promoting healthy and rapid development of China’s railway industry.Railway is a capital-intensive and irreversible industry,risk and uncertainty are inherent problems associated with railway construction investment.In the background of sustained growth of railway construction and investment scale,it should pay attention to the problem of how to manage and control the investment and financing risk.For railway construction projects,large amount of capital investment,capital recovery period is long;many factors influence characteristics of project investment and bring high risks and the uncertainty of financing.Therefore,the risk management of railway investment and financing is the government department,Railway Corporation,local railway investment companies and financial institutions such as investment and financing of railway stakeholders need to focus on and take measures.The main purpose of this study is to make the government,railway investment enterprises,financial institutions and other relevant participants in capital supply side railway construction on the railway investment and financing risk,and provides policy and operation reference suggestions on the implementation of measures to prevent and control risks,through participation.Current domestic and foreign documents for railway investment and financing research mainly focus on investment and financing innovative forms,investment and financing system reforming,however,compared to the former two themes,the studies on issues of railway investment and financing risk are relatively scarce,moreover,when it comes to railway investment and financing risk studies,the analysis is qualitative and macroscopic discussed,though,in terms of studies which mostly conducted by building models,using data to quantify the risk assessment seem to be few.In this case,the establishment of a suitable and effective integration of risk assessment models,for the purpose of quantified assessing the properties of risk,thus determining the proposes on the risk control recommendations and stipulating a final risk prevention measures,will result in a practically magnificent meaning in reality by promoting investment and financing,ensuring the development of the railway projects.On the other hand,previous studies have concentrated on static analysis of railway investment and financing risk,since the railway projects highly stressed their public welfare attribute,which may inevitably weaken the dynamic financial indicators railway project financing assessment,however,the operating value of railway projects are also supposed to be play a prevailing role,especially concerning the railway itself a huge transportation system,if its operation achieve to run well,it will benefit economic and social development in China,instead,the failing rail system operator will bring lots of potential risks,even extending to the fiscal,financial system and bringing systemic risk.Because of the current railway investment implicit government guarantees and unclear settlement mechanism,the potential railway investment and financing risk is hidden.Regardless of the railway project using traditional bank credit or BT,BOT and other project financing model to raise funds,it is important to accurately assess the economic value of the project and the project’s potential risks.For each of the project participants,the main challenge is to reduce the uncertainty in a variety of loss to an acceptable level.In the process,it is crucial to establish a scientific and rational risk assessment and risk analysis mechanism after various risk quantification,the expected benefits of the project,the economic environment to make accurate forecasting and risk assessment,under the premise of minimizing the risk to make optimal investment and financing decisions.Therefore,this article is to study the carrier rail project itself,around the risks in financing railway projects faced during a study.In this paper,after investment and financing risks associated with railway research literature review,the first of the concept of railway investment and financing risks have been defined,the theoretical basis of investment and financing risks associated Railway introduced.In short,the railway investment and financing risk is the uncertainty of loss in the investment and financing railway projects.In the history of railway investment and financing and risk characteristics of railway investment and financing to make a brief discussion on railway investment and financing involved the various types of risk carried out a detailed classification and identification,risk identification aims to identify the main risks associated with the investment and financing process covered in the section on the importance of identifying risk,the possibility of risk by survey methods were studied;after the risk identification,risk for all types of features,this article recommendations based on different risk characteristics to be evaluated by different methods,and economic activity associated with weak but also have a significant impact on railway investment and financing activities of a class of recommendation by AHP,fuzzy mathematics method for evaluation;a class of risk factors associated with strong economic activity and can be quantified by establishing a dynamic financial analysis model using Monte Carlo simulation and Copula correlation method to expand its quantitative analysis.In quantitative research,and in the past mostly on Investment Risks Railway is different is that the asset value in view of the railway investment and financing the formation of the railway an important benchmark to measure the railway investment and financing if appropriate,by dynamic financial analysis model can effectively analyze the value of assets railway investment and financing risks,the paper selected passenger,cargo,freight,energy prices,the unit energy consumption,interest rates,catastrophe,management of operating expenses and labor costs and other eight have a significant impact on the operating conditions of railway factors established dynamic financial evaluation model and the integrated use of Monte Carlo simulation methods and theories related Copula function,reliability theory carry out the evaluation of the railway project investment and financing benefits and risks.In addition to the risk factors considered in the model,the paper also analyzes the planning risk,political risk,the risk of moral hazard,asymmetric information problems pointed settlement system of the railway system will also lead to an opaque railway investment and financing risks,need gradual reforms.On the basis of qualitative and quantitative risk analysis,risk forecasting,prevention and control are discussed.Based on that the Midwest rail railway is the key areas of railway construction,and current literature for Risk for Common Speed Train less,the paper also selected in southwest China in a general speed rail projects empirical analysis to verify the correctness of the model.In the empirical analysis of the model,further proposes the optimal financing structure and optimal catastrophe insurance arrangements rail projects.Risk identification and risk assessment is the most basic part of this article,is the core part.On this basis,railway investment and financing risk prediction,prevention and control and risk management optimization and upgrading of the policy recommendations of this article is the most realistic part,to benefit China’s railway investment and financing risk management practices.This paper is divided into seven chapters,studies done and conclusions mainly:First,through a review of the literature and the risk classification of the results obtained,in railway investment and financing process,the lack of passenger and cargo traffic,the risk of changes in interest rates and other economic classes and completion risk,environmental risk,the risk of non-economic class will have railway investment the results of financing uncertainty,has a significant impact on railway investment and financing effects.Passenger,cargo,freight,energy prices,energy consumption and operating unit,operating income rate,catastrophe,management costs and other uncertainties eight railway projects will have an impact,and thus to bring the railway investment and financing risk,dynamic financial analysis model for these types of risk factors that can be established by this article,the use of Monte Carlo simulation method of quantitative evaluation.Second,on the basis of quantifiable scientific modeling and risk of each risk factor correlation analysis,financial modeling and dynamic simulation method Monte,we will be able to quantify risk factors,quantitative assessments,and financial and was reflected in the economic value,allowing for the real value of the project that is of interest to investors,real options prices more scientific and reasonable valuation,and thus the potential investors have important reference value.Third,the risk assessment aspects,from the dynamic financial analysis model runs,the business operations for the project have a greater negative impact on profit and loss situation of fluctuations in interest rates and risk factors for catastrophic events,and the smaller the impact of energy costs.The reason is that the energy consumption accounts for a relatively small cost of railway operations.Fourth,the strength of the different railway projects of public welfare,the risk is different manifestations,prevention and control measures and policies should be classified railway investment and financing risks.In this paper,under the premise of the model run results under not optimized conditions,the end of the project payback period(15 years running),not to increase their investment in,or other forms of additional capital,the probability of project net asset growth of only 19.2 %,can initially determine,in the absence of financial resources to support the case,the project does not have the economic value of the investment,it is difficult to attract social capital.For such a strong public service railway exist "high investment,low volume" feature,has a strong business risk,and should therefore be put in enough capital,increase capital,policy support;and strong business Railway showed strong competition risk,the government should do the planning to avoid duplication of investment,improve operational efficiency.Fifth,optimize the investment environment to reduce railway investment and financing risk also has an important role,we should pay attention to the construction of the railway investment and financing environment.While passenger and freight traffic,freight,interest rate uncertainty factors are the core railway investment and financing,but the railway construction completion risk faced in the process,environmental risks and opaque railway settlement mechanism will also direct or indirect investment in railway projects financing a major impact.Therefore actively improve the railway investment and financing system reform,scientific and rational planning of railway network etc.can be reduced railway investment and financing risks.Sixth,this paper based on empirical southwest regions of a railway project analysis,recommendations for risk financing structure of railway construction and operation of the body can be controlled,it can effectively circumvent the financing structure by optimizing the way.For a fixed proportion of capital rail projects,through stochastic programming module Dynamic Financial Analysis model can be to find the optimal financing structure.In this paper,empirical project financing structure for the optimum ratio: bank loans accounted for 13% fixed interest rate debt issuance railway bonds accounted for 87%.Seventh,based on empirical analysis of this paper,a railway project in southwest China,is recommended for the construction and operation of the main railway catastrophe risk can’t be controlled,it can be transferred through reasonable risk diversification and insurance arrangements.For higher catastrophe exposures railway project in full knowledge of the conditions to their own risk,conduct scientific and reasonable insurance arrangements,optimizing the ratio of insurance,can greatly improve the stability and sustainability of its revenue management operations.In this paper,empirical project,the use of stochastic dynamic programming method and in line with market catastrophe insurance pricing,optimal risk transfer arrangements for the project was separated catastrophe losses from 36.9 to 70 million yuan borne by the insurance company.Since it is difficult to get specific rail projects full,detailed data and other reasons,this study have some deficiencies,and still have space to research,but this study will provide useful reference for research risks railway investment and financing,and to benefit governments,investors and financial institutions doing business China Railway investment and financing risk management practices work.