The Research On The Risk Of China’s Local Government Liabilities

When the local government try to borrow money to solve the bottleneck’s problems,,italso takes incalculable financial risk, financial risk and credit risk to local governments,banks and even the country. Dubai’s foreign debt crisis unresolved aspects, followed bySpain, Portugal, Japan, Ireland and other countries have also appeared in the debt crisis ofthe clues, in2011the Japanese debt/GDP as high as204.2%, Greece,136.8%Ireland,98.6%, Portugal85.8%, all have surpassed the international warning line, the same to theAsian countries, Japan, the debt crisis level rose sharply after earthquake, relying on bondsto ease the budgetary pressure, and increase the size of government debt, post-disasterreconstruction is a threat to national solvency. Domestic aspects of local government debtand the implicit debt explicit total number of striking, impulsive and local investment banklending impulse superimposed on each other resulting in the local government debt risk hasbecome the biggest bank "potential menace." If any of the liabilities of the excessive spreadof the credit system will lead to the collapse of local government, forcing localgovernments to no choice but go bankrupt, triggering a financial crisis and politicalinstability, thus affecting China’s financial security, economic security and financial security.It can be seen in a timely manner to establish an effective financial risk evaluation systemfor government debt is particularly important.This article is from a financial point to see the view of the definition of localgovernment debt, types, formation mechanism and risk points, running the agent theory andthe Corporate Government of Western thought, from national, local, banks and point ofview of the National People’s Congress four huge debt causes, and then from theperspective of four local government debt will be divided into legal obstacles to risk therisk, inflation risk, government bonds shifted risk, default risk, using the SPSS to establishthe local government debt risk factors of the model, finding a key indicator of localsolvency and further build the risk assessment of local government debt indicators, in viewof the implementation of most of our local "land finance" in the case of it borrowing newdebt to repay old debts can not be the case, and ultimately to land transfer income to repay the debt due to the practice of local government in the estimated liabilities for our countryrisk index, the design of the land protection rate index; and ability to take into account theimpact of NPC’s supervision within the context of the local solvent, and then ShijiazhuangCity degree of validation for the model, and finally proposes countermeasures to improvethe prevention and control of financial risks provide a reference, but also for prevention andcontrol of banks and other financial institutions to provide warning of financial risks andenlightenment.