Research On The Transformation Of Local Government Financing Platform

In recent years, our country’s economy has achieved rapid development, has become the world’s second largest economy, it depends on the strong support of the local governments, local governments has played a vital role in promoting prosperity as well as local infrastructure constructing. But local governments were once in a fiscal deficit, and the "budget law" make it clear that local governments should not borrow money, so in order to pull the local government out of the woods of making ends meet, financing platform arises at the historic moment. At the end of 2013,over ten thousands of financing platform companies have been established by governments to raise fund. But at the same time we must pay attention to the contradictions within the financing platforms, with the enlargement of the number and size, more and more financing platforms are exposed to problems such as inefficient operation and opaque management. As the returns of its investment projects are guaranteed by local governments, most platforms do not have enough power to maximize their efficiency and effectiveness of operation. Thus, it is high time that we should regulate the running of financing platform.In June 2010, the central government had start to clean up and standardize local government financing platform, in October 2014, the document which is promulgated by the state council "on strengthening the opinions of the local government debt management" specified to strip the financing platform company government financing functions. The policy is a major turning point for local government financing platform,which means that the financing platform which used to be dominated by the government would then gradually get rid of the responsibility for local governmentfinancing and then turn to be self-sustaining general enterprise. Therefore, the local government financing platform companies are facing transformation.This article demonstrates the necessity of transformation for the local financing platform, and then build credit spread model to predict and evaluate the credit risk in the process of transformation for local government financing platform. Based on this,I put forward the improvement measures and suggestions on how to promote the successful transformation of local government financing platform, so as to achieve the effect of moving financing platform company from administrative role to market role.