State Credit System Model And Its Application In Regional Financial Management

Credit risk as a kind of financial risks, is one of the most ancient risk in financial markets. In recent years, financial crisis outbreak from the accumulated potential financial risks occurred frequently in many countries. Preventing economic crisis arising from state credit risks has been paid more and more attention by Governments. As China's socialist market economic system continuously improved, the importance of state credit system for the macro-economy has obtained consensus by communities of the society.The aim of this paper is conducting a comprehensive research to the state credit system, the research involves the state credit system theory and the state credit system model. On the basis of summing up the relevant academic research, this paper carries out a systematic study of the state credit theory such as state credit system theory basis,inherent operational mechanisms and the state credit of local government through recognizing and defining concepts about state credit system, all these studies are from the visual of the relationship between state credit system and other credit system. On this basis, this paper builds state credit system model relying on Hicks risk function .Finally, We forecast necessary state credit resources when the local government suffering risk of fiscal deficit and inspects the application of the national credit system model in the regional financial management by analyzing the revenue and expenditure changes and affecting factors, and we can draw the final conclusions: The government can reduce debt scale by using inflation when face possible deficit lost in the future, which will trigger sovereign risk. We can avoid risk through adjusting the government's structure of assets and liabilities. Therefore , the construction of state credit system has important significance.