A Research On The Local Financial Risks

This article researches from the basic theory of local financial risk, and analyses the status and the cause of the local financial risk in detail. Currently, China's main problems of local finance are deficit and debt risk, income risk, expenditure risk and system risk.The main factor that induced risks is the weak strength of Local economy. It is the defect of the local government's irregularities in borrowing and security that caused a heavy debt burden. The unreasonable structure of financial expenditure and Imperfect tax system, which constitute the institutional deficiencies, are also the fundamental reasons that triggered the local financial risks.The main experience aboard of preventing the local financial risks is establishing the monitoring system of local financial risk, implementing budget management of financial risk, standardizing the management of local government financing, regulating the financial expenditure management strictly and making a reasonable define of the financial relationship between levels of government.By drawing on the useful experience aboard, the author proposed five measures of preventing the local financial risk on the basis of analyzing the status and the causes of China's local financial risk. The measures are: raising awareness of the financial risks, establishing a sound early warning mechanism; developing the local economy and consolidating the resources base; standardizing the behavior of the government and strengthening the debt management; improving the financial departments; innovating the expenditure mechanism and constructing the framework of public finance, and so on.