Risk Prevention And Control Of Local Government Financing

The U.S. sub prime mortgage crisis and the outbreak of the Greek sovereign debt crisis, spread to the global economy, also make the government debt risk has received widespread attention and reflection around the world.And china, which is in the economic transition period, under the context of the development of economic restructuring and economic system in-depth reform,its local government income gap is more and more big, and the scale expands rapidly. Scale of local government debt has reached record levels, in2012～2013of local government debt maturing over the past two years, the debt problems will affect the local fiscal risk benign operation, it will also affect the sustained economic development and social stability in China.According to the Rapid development of urbanization in our country, the local government infrastructure construction requires a lot of money, but with some problems, For example, the unreasonable Allocation of Executive Financial Power, that make local governments at all levels in China have to adopt various ways to alternative financing, thus, the local government financing platform arises at the historic moment.Seemingly calm water, actually undercurrent. With the debt financing platform company excessive growth, and the solvency risk increases, the local government’s hidden liabilities increases. The internal control management of Platform company is not sound; the Local government guarantee is not standard; Platform for mutual insurance company is serious; and some Banks and financial institutions to interest-driven, which cause the lack of credit risk management, all of above is apt to cause financial risks and financial risks.Early in2010, regulators began to take measures to clean up and rectify, regulate local financing platform, and make the local financing platform of loan risk classification standards and provision for standard provisions clear and definite, with the specifications control and risk management of government and regulatory bodies, the development of local government financing platform become matures. According to the above situation,, the exploration of the local government’s connotation, functions and characteristics, and the operation mode of financing platform, especially local government financing platform risk early warning and protection in the actual execution, proved to be with a lot of necessity.This article firstly analyzes the background of the research and the current situation of the research both at home and broad, and then expounds the connotation and feature of the financing platform of the local government. The article focus on the difference between the local government financing platform and other enterprises, because of these differences, we have focused on the leadership and control of the government when we made the comprehensive comments on the local government financing platform. The article through the comparative analysis of financing mode at home and abroad, carding the commonalities and differences to find some good reference for China’s national conditions。And the next is the analysis of the current situation and problems of China’s current local government financing platform.The article analyze the reasons of the generation and crazy growth of the local government financing platform, and obtain the internal cause of the increase from the local government level, the financing platform’s self level, and the Bank level.. Thus, we have a clear direction on the status of local government financing platform, Conclusion:local debt scale big growth of poor quality, makes the platform in high risk, the real problem of local government financing platform of local government debt is the size problem:Too large. Platform loan risk is risk of the financial system, but is also the local government financial risk.In order to give the local government financing platform for a reasonable evaluation system, resulting in the formation of risk assessment and early warning system of corresponding, we adopt the fuzzy comprehensive evaluation method, and establish the index system and evaluation method of local government financing platform credit evaluation. In empowerment of specific indicators, this paper using the Delphi method combined with AHP (analytic hierarchy process) method to empowerment the various indicators of the model, and verify sequential consistency. According to factors on the classification and index score, the article use the expert advice of score, thus draws the corresponding credit rating. Then, the article takes Hefei construction investment as an example for case study, to verify the feasibility of the fuzzy comprehensive evaluation method. Such inspection results we can see that external financing environment and the internal hematopoietic function for the development of the local government financing platform has a crucial influence, thus we propose opinions on risk mitigate.With regard to the risk of government financing platform, the article proposed the suggestions and solutions, separately from three levels:the local government level, the financing platform’s self level, and the Bank level. Firstly, we must strengthen the management of government debt, establish The early-warning mechanism of risk to strengthen risk prevention and control, and strengthen supervision of construction projects. Secondly, we should standardize the platform model of corporate governance, strengthen their own hematopoietic function, and establish an effective management mechanism to prevent acts of government mutual insurance. Based on this, we should actively broaden the financing channels, trying to set up special issue local government bonds and a sinking fund, in order to achieve the purpose of raising revenue and cutting expenditure. Banks should use the overall policy which combines seizing the regulation of total loans, optimizing the structure, making the focal, increasing revenue overall policy, To help local government financing platform to regulate the healthy and sustainable development.