Economic Effects And Risks Of Municipal Bonds Issued In China

Municipal bonds is a form of bond that urban governments absorb funds from society according to credit principal and meet city public expenditure. As a good financing tool, municipal bonds play an important role in developed countries' bond markets. Until March 2009, our country can issue municipal bonds through the Ministry of Finance.At present, research in China in the area of municipal bonds focuses on their necessity and feasibility; this paper will attempt to innovate from this existing base, by researching risk and economic effect with respect to these municipal bonds. It provides theory basement and reality significance for the issuance of municipal bonds in China.This paper begins by discussing the nature of municipal bonds and theory related to their issuance, continues by introducing the positive and negative economic effects that can accompany the issuance of municipal bonds, then concludes with an analysis of risk associated with municipal bonds, and uses a financial risk assessment and early warning model as well as the KMV model to estimate the financial risk and credit risk of the issuance of municipal bonds in Shandong Province, summarizing risk prevention and control measures.