Research On Local Government Financing Platform

The financial crisis in 2008 has brought a heavy blow to the global economy, the world economy so entered a downturn. In response to the crisis, the Chinese government announced the four-trillion-yuan economic stimulus plan in the 4th quarter of 2008; the local governments also actively launched many investment plans. But the local governments'revenue cannot increase rapidly in short time; they can only through debt financing to satisfy their financing needs. Because the current laws in our country don't allow local governments to issue bonds, that means there does not exist market financing system channel to the local governments. In order to evade the current policy obstacles, local governments establish "the local government financing platform". The local government financing platform sets financing, operation, construction and debt repayment for an organic whole. It finances directly and indirectly in capital market instead of the local governments in order to achieve the purpose of financing for the local governments.This paper expounds the connotation, function, characteristics and significance of the local government financing platform, and further illustrates the operation mechanism and financing ways of the local government financing platform through describing the condition of the international and domestic local government financing platforms, especially analyses the operational process and regime of the local government financing platform in our country. This paper also analyses the special function of the local government's credit in the financing platform, and how the platform finances in the capital market for local government relying on its credit. Our paper emphatically analyzes the risks of the local government financing platform appeared in the actual operation process, such as debt risk and joint financial risk, and through the data and certain numerical analysis method to evaluate the financing platform. This paper accurately understanding the relationship among the local government and its financing platform and other financial institutions, comprehensively analyzes the operational condition of financing platform, clarifies various potential risks and hidden troubles. In order to prevent the system risks and strengthen the supervision of the financing platform, this paper puts forward the relevant measures and suggestions. This thesis of local government financing platform has great theoretical and realistic significance to establish and consummate the regime of government financing platform's assets management system, optimize the allocation of resources, and promote local governments to provide better infrastructure and public products or service.