A Research On The Municipal Bond Issuance Risks In China

The municipal bond is a financing tool which can be used to provide fund for the city infrastructural facilities. The developed countries obtain widespread development of the municipal bond, and more and more developing countries have realized its value.This paper is based on the remark about the correlated theories and researches of the municipal bond .With Chinese present actual national condition, the feasibility of the municipal bond issuance in China is analyzed, and the reasons why our central government does not promote the municipal bond to carry on in our country yet are narrated. This paper focuses on the municipal bond issuance risks in China, and we take pains to study the hidden dangers which the municipal bond possibly brings if our country allows the Local authority to issue local municipal bond, under the current national condition. Then, the improved KMV model and signaling game model are utilized to investigate the credit risk and moral hazard risk. Finally, in view of the municipal bond issuance risks analyses, with Chinese actual situation and the successful experiences of the municipal bond supervision in the developed countries, this paper puts forward the countermeasure proposals which will drive our local municipal bond to appear.