Based On Kmv Model Of Local Government Financing Platform Loans Credit Risk Research

In response to the U.S. subprime mortgage crisis and the global financial crisis, China adopted a 4 trillion economic stimulus plan. Local government, to pass the existing institutional and policy barriers, establish financing platform to give financing, construction and debt service, instead of government direct borrowing. Hence all levels of local government financing platform develop rapidly. However, with the outbreak of the debt crisis of Dubai, Ireland, Greece, Spain and other countries, governments have to re-examine the economic impact of the negative stimulus. We should pay attention to local governments financing platform at all levels. The reasonable use of market-based financing to finance government projects, while effectively inhibiting the blind expansion of government debt, is a major concern of local governments in China now. In this context, the paper based on modern financial theory, the use of theoretical discussion and empirical analysis, comparative study and synthesis of a combination of research methods, from credit risk management theory and risk measurement methods based on the KMV model to local empirical analysis of credit risk. Finally, based on the above analysis, we draw a conclusion that the government can neither take local financing platform for laissez-faire, nor blindly restrict. It should be a reasonable and sustainable balance between controlled risk and economic development. We should take scientific and rational approach to deal with government financing platform to promote local economic and social sustainable development.