Risk Prevention Research Of Local Government Financing Platform

The local government financing platform with Chinese characteristics is an indirect financing innovention against the background that local government’s financial power and administrative authority are unbalanced, and that Chinese urbanization is developing at a rapid rate. It have had an important effect on pushing local economy’s development, intensifying the construction of infrastructure and tackling the enocomic crisis during its construction and development. But with the apptoaching of huge loan’s collective repayment period, there comes lots of defects and relavent risk issues such as the liabilities scale of local government fiancimg platform is too large, the liability ratio is too high, the financing channel is single, some platform’s investment is not true, there is dispute of debt guarantee validity, the position of the financing platform is too broad, internal management is imperfect, operation efficiency is low, risk prevention awareness is weak, etc. If precautions are not taken immediately, it may lead some serious problems such as widespread defaults of the platform, financial systemic risk and halt of local development once the the risk of local government financing platform breaks out. The local government financing platform risk has attracted wide and highly attention of society, and the Fiscal and Financial Regulatory Authorities have also taken measures to ractify it.Risk prevention of local government financing platform is the theme of this paper. First, the definition, background, development and functions of local government financing platform are introduced briefly. Secondly the causes, types and possible serious consequences of its risk are analysed in detail from the aspects of management, fiance,development and so on. Thirdly, a risk early-warning model of single financing platform is constructed and empirical analysis is undertaken based on Annuity Present Value Factor Theory with fixed growth rate, and an evaluation index system using the GA-PSO hybrid planning algorithm which is focused on government dependence, financial sustainablity, current ratio, asset-liability ratio, return on total assets and other indexes, and32representative local government financing platform companies are selected to implement quantitative analysis and give early warning. Finally, the paper points out that comprehensive measures should be taken according the production, development, peration mechanism and existing related researches of lacal government financing platform, namely regulating the behaviors of government, financing platform and commercial banks in policy, and that specific technical means like asset securitization and syndicated loan model should be used respectively to deal with stock and new loans in order to guard against and defuse the increasingly prominent risk of local government financing platform.