Risks And Countermeasures Of Local Government Financing Platform Loans

2008global financial crisis, to deal with the crisis our country has taken a series of rescue measures, including four trillion investment plan to stimulate domestic demand. Since then, to solve the problem of insufficient project matching funds the government have set up local government financing platform. The establishment of local financing platform not only ease the local government financial problem of insufficient funds, but also bring opportunities to the development of commercial banks and other financial institutions. With the continuous development and growth of local financing platform, local financing platform loans hit record highs. According to the CBRC statistics, local financing platform loans in2010amounted to9.1trillion,221.9percent of the local fiscal revenue in the same year, it is clear that this is beyond the local government’s ability to repay. In order to avoid government default risk in causing systemic risk of the financial industry, since2010the relevant departments has published notification of local financing platform loans or opinions every year. Obviously, it is very important for local governments and commercial banks to known how to clearly analyse and guard against the risk of local financing platform loans.This article includes five parts. The first part is an introduction, including the topic’s background, significance, research status, research methods and ideas.The second part focuses on local government financing platform’s basic theory, including the meaning of local government financing platform, the theoretical basis for the development process and related patterns.The third part analyses the status of local government financing platform loans. Firstly, this chapter analyzes the total amount and structure of the local government financing platform.Then it ananlyzes the scale,structure and use of the local government financing platform.Which give a comprehensive understanding of local financing platform loans realities as a reference discussed later.The fourth part mainly introduces the risk and the causes of local government financing platform. According to the risk performance, the fifth part proposes targeted countermeasures that involve the government, commercial banks and the local government financing platform.