The Study Of Local Government Financing Platform Risk And Its Prevention

The article is based on objective reality of the financing platform of Chinese local government. By reviewing and commenting the existing government debt theory, public choice theory and risk management theory, the paper defines the starting point of research, basic category and path, giving a scientific definition of the concept and connotation of the local government financing platform and its risk. After that, this paper analyzes from three aspects the causes that lead to the formation of the local government financing platform, and then explain the characteristics and expressing forms of risk of the local government financing platform. By following the frame, it studies the formation mechanism and conduction effects of risk of financing platform. Further, on the basis of available data, the risk of the local government financing platform has been analyzed. Finally, the paper makes some corresponding policies and suggestions.The main conclusions are listed below:1. Local government financing platform is an official non-formal finance which the local government innovated in order to breaking the financing constraints with the inadequate supply of China’s formal financial system.2. The internal defects of fiscal decentralization system in China,"economic-man" property of the local government as well as the unreasonable financial supply system are the root causes of the financing platform, whose risk is objective, hidden and relevance. The available data suggests that the risk is great but controllable.3. In order to prevent the local government financing platform from risk, some methods should be taken, including reforming the related system, perfecting financial supervision system, improving financial institutions’ risk awareness and management independence, completing the administration structure and operating system of financing platform itself.