Universities' Finance Risk And Its Prevention

From year 1998 to year2005, there is a rapid expanding in scale of school enrollments, which developed to 24,000,000 in year2005 at the basis of 3,400,000 in year 1998. This kind of circumstances led to the incident which on the one hand, fund shortage of university construction has naturally arisen, on the other hand, because of limited state finance, university construction suffers a bottle-neck of limited state educational investment. Huge need of fund can never be filled only by students' intuition, whereupon, bank loan became the main aqueduct of huge construction investments. Meanwhile, at the situation of encouraging universities expanding scales of enrollments, the government permits universities loan from bank to develop education. And banks give a such convenient policy that universities can easily get loan from banks. As a result, universities universally fill the fund shortage with loans to develop represent higher education, which has been the chief method of universities to hold opportunities, to expand fast, to form the scale merit. Loan has taken a more and more important proportion in the whole universities investment organization. Judging from the current actual situation, the University of Banks' Loan being improved universities' running, but the resulting huge debt pressure and shortage of funding for education issues have become increasingly prominent. Now the state has not invested in major changes in circumstances, many universities and universities will plunge into a "loan-to-loan" plight at the same time facing a great financial risk. This did not attach great importance to loans and loan project feasibility demonstration of the ability to enhance risk analysis of the debt, the finance risk prevention work well, college is facing a major theoretical and practical issues.This paper from the background of college finance risk, risk characteristics, causes of risk, risk prevention in four areas, and explains and discusses.Section 1 summarizes universities' loan background. From 1998 to 2005, the number of universities enrollment increased by three times, in-school size increased seven times in the state's financial investment growth limited circumstances, most universities and universities chose to bank loans, according to the Chinese Academy of Social Sciences in 2005 Social Blue Book said the disclosure of the data-run universities and universities in the bank loan regulation Mo Tat 150billion -250 billion. Starting from the 1999 Expansion involved in the turmoil in the lending institutions of higher learning, both before and after 2008 will be ushered repayment peak. According to the original loan plan, in addition to reimbursement of interest each year universities and universities, but also have to repay a certain amount of principal, but not in the state's financial input major changes in circumstances, many universities tuition income, in addition to maintaining day-to-day operation, only a small step Scrap conformation repay the enormous amount of bank interest, and reimbursement principal huge difficulties facing huge financial risk.Could it be possible that institutions of higher learning go bankrupt like enterprises? People have different opinions in the scholastic field. From my point of view, it is impossible for a university to declare bankruptcy since it is not an operating unit but a government-sponsored institution which plays an important role closely-connected with public interests. So the government should shoulder some certain responsibility in good time. Referring to universities and universities institutional reform, brook no delay to keep watch financial risk. For one thing, it should be regulated that only the real private universities or collages could have the authorities of investing and raising money in a commercial way. For another, universities and universities established by the government must thoroughly take control over loan financing in order to make sure national investment and public interests.Section 2, the characteristics of finance risk of institutions of higher learning. Risk is a main characteristic of financial administration external environment under the condition of market economy. In a broad sense, finance risk of institutions of higher learning includes not only the risk of being in debt in order to raise money, but also the decrease of credibility caused by such factors as environmental changes, inferior beneficial results and the risk that fails to get financial fund or unable to raise money by getting a loan from bank. In a word, it is the risk of unbalanced financial conditions. It is the least possible thing to happen that a university goes bankrupt for being a government-sponsored institution, its unbalanced financial conditions differ from that of the commercial enterprises. In a narrow sense, finance risk of institutions of higher learning means the risk that fund chain breaks and the difficulties of fund payment. Shortage of fund is likely to happen although it is a government-sponsored institution. For example, it can not send out salaries or fails to cover its daily expenditure. Facing loan risk, some of them compress scientific research funds repeatedly, especially that of departments essential for teaching so that they can not but reduce many projects, such as the cancellation of academic work subsidizes policy, reducing the standard of going abroad to participate international academic conferences, and so on. At present, the main reason of the lack of actual operation ability which exists in majority of our students imputes to the serious insufficiency of practice teaching funds. Due to the rapid expansion of university scale, the massive funds well up to the capital construction project, some of them start to limit the enhancement of professional teacher wages, bonus and the welfare treatment. This causes the school to lose the cohesive force day after day, the massive outstanding backbones teacher unceasingly drains, thus seriously affects the teaching scientific research and the stability of talented persons, and thus causes the education quality to give the discount greatly.Part three, the causes of debt formation. On one hand, there are objective causes, such as the expansion of students' recruitment; on the other hand, the subjective causes also exist, such as internal management.Inadequate public financial input into universities and universities is an objective reason for the College finance risk. Although the insufficient funding of China's higher education, student tuition fees substantially improve social standards is also unbearable and impossible, thus borrowing becomes the only choice in a longer period of current and future for college. Bank loans out of control is the direct cause of the finance risk . With the public's growing demand for higher education, either expanding school enrollment size, or setting up first-class high-level university, we need to have tremendous support for the school funds. Although the financial input of funds to higher education from the state has maintained a fairly high growth, contradictions between unconventional development of schools in the fierce competition and the acute shortage of funding for education is more prominent than at any time in the history . In the context of the market economy, the school's internal operational mechanism significant changes have taken place, the school funding shortage in the case, in order to adapt to the needs of development, for the present, turning to the help of bank credit, becomes an inevitable choice for schools. The lack of awareness of risk of the college administrators is the subjective reason. Often college administrators lack the consciousness to treat the college as a real subject of the laws, and universities and universities once fail to be a "Economic Man", with their economic behavior not consistent with the laws of economics, and then college activities which are not in line with the economic laws of economics will lead to a finance risks. In addition, the current tenure system for college head is in place which means loans took place in A leadership term, but it is B leadership repayment term thing. This appointment system to a certain extent, also increased the risk of loans. Ineffective budget management constraints also formed the deep-seated reason of the college finance risks.The fourth part, College finance risk prevention. Establish a sound investment management and economic decision-making responsibility system; strengthen college finance risk awareness, through the establishment of economic responsibility, to assume leadership at all levels of financial security and risk control responsibility. College loans should adhere to the correct orientation of investment, and scientifically and rationally determine the scale of college debt. School loans direction of the investment priority should be given to the "bottleneck" problems in solving the school sponsoring expand such as building schools teaching infrastructure and improving conditions for sponsoring hardware, but we must act according to our capabilities, control the scale of loans .Optimize the loan capital structure, and strive to reduce funding costs, according to the capital market interest rates and the demand for capital in the process of projects construction formulate scientific and rational plan for use of program funds, by optimizing the structure, lower borrowing costs and reduce finance risks. Credit funds will be included in the budget management system and financial management and accounting scientific should be improved. The introduction of market mechanisms to implement centralized procurement system. Broaden the financing channels and upgrade capability of resisting risks. Universities and universities should establish multi-channel fund-raising mechanisms, and increasing revenue is to prevent universities and universities in the fundamental approach from finance risks. The establishment of an effective risk prevention mechanism and the debt loan risk early warning systems, universities and universities should devise a series of indicators of possible risk factors for early warning.Build perfect bank advances management system and control system inward, universities and universities director wants to set up and strengthen finance risk mental consciousness , many universities and universities are universities and universities with bank advances when the capital construction main part invests in a mode of financing , building bank advances management system is that universities and universities keeps watch finance risk necessity measure then in present.In short ,face at present universities and universities finance risk appearing, the finance that the country asks to enlarge universities and universities on one hand throws into, further, keeping watch that another aspect universities and universities asks to be ready for various finance risk conscientiously, builds perfect bank advances management system and controls system inward, that the finance risk reinforcing universities and universities debt management, universities and universities is sure to is effective charge.