Commercial Banks To Local Government Financing Platform Loan Risk Analysis And Countermeasures

Because of the global economic crisis in 2008, China central government adjusted its macro economic policy at the right moment in order to prevent domestic economy from gliding. The central government implemented positive financial policy and moderately loose monetary policy accompanied with economic stimulating program about 400 billion RMB within two years. The local governments positively innovated ideas, transformed developing ways in order to construct a new type of financing platform under the instructing regulation issued by The People's Bank of Bhina in march,2009.The local government financing platform increased rapidly both in quantity and scale in 2009. It aroused extensive attention of all circles. However, because of the untransparency financial conditions and bad loans from the banks, the commercial banking credit risks on local government financing platform progressively appeared. Therefore, how to control and manage the credit risks of local government financing platform has become an important section in crediting business of commercial banks.This article mainly focuses on credit risks of local government financing platform. Firstly, it elaborates the concept, characteristics and present conditions of local government financing platform. Secondly, it analyses the cooperative patterns of the commercial banks and the local government financing platform. Thirdly, it illustrates the positive function of the local government financing platform and the commercial banking credit risks of it. Fourthly, it sets examples of the commercial banks in Chengdu to explain the patterns and present conditions of the local government financing platform. Lastly, it looks forward to the future of the local government financing platform and discusses the risk preventing measures.This article consists of five sections. There must be some defects because of the author's limited knowledge. The author would sincerely accept the comments and criticism pointed out by the experts. The author will try his best and work hard in the future to carry on this research about controlling and managing the credit risks on the local government financing platform.