Research On Efficiency Evaluation Of Local Government Financing Platform Based On A DEA Model

In recent years, in order to promote local GDP and accelerating the process of urbanization, through the establishment of local government financing platform to support a variety of local infrastructure construction. China has actively expand domestic demand provided a great impetus. Especially after the2008-financial-crisis, the local government with the central government introduced the "four trillion" plans to expand financing needs, so that financing platform has experienced a rapid development. The financing platform could meet the financing needs of the government, led the project process, and provide some public services, meanwhile it also revealed a number of problems. Current researches on financing platform always take a point on the debt risk from the financing problems, then giving some solutions. But as corporate financing platform, they have to achieve their corporate objectives and the government will by financing investments. In this article we try to understand the efficiency of investment focused on local government financing platforms, by selecting scientific evaluation, building efficiency evaluation model specification.This paper is structured as follows:Chapter1introduces the background and significance of the research. Giving the concept of local government financing platform and describes the research method, content, innovation and shortcomings.Chapter2analyzes the rationality and necessity of local government financing platform, and sums up the role of financing platform played in development. This chapter reviews the development of the financing platform since1980s, and summarizes several representative model of financing platform. In the end of this chapter some current problems is pointed.Chapter3is a theoretical model of the investment efficiency of financing platform. Firstly, we defines the concept of "efficiency" in economics, and then literature and theoretical methods are reviewed for relevant public goods. On the basis of the concept, research methods about evaluating efficiency are reviewed In the evaluation part of the chapter, study on the efficiency of government investment are reviewed, and with these papers, further studies on the efficiency of the financing platforms which is to bear part of government functions were reviewed. We learns the index system of Liang(2010) to build empirical models and output the results.Chapter4is to built a evaluation system. Due to the choice is a very mature model-DEA, the selection of indicators is extremely important. This chapter introduces the principle of the selecting indicators, the index category and data sources, and show the results of the data after processing.In Chapter5we build a DEA model to get scores of relative investment efficiency through optimal linear programming, in which efficiency of Shenyang Water has been the highest for five years, and the other five companies presented continuously an increasing trend in investment efficiency. While the lowest score of relative efficiency is Zhuhai Water. The efficiency score of this chapter will be the explanatory variable in the next chapter. In the second part, we try to identify the impact factor to investment efficiency of financing platform by random effects, fixed effects and Tobit model to, which includes both the company’s financial indicators (asset-liability ratio, long-short term debt ratio), and the local government’s economic and fiscal indicators (new fixed asset investment, government size, GDP growth). Empirical results show that the impact of new fixed assets investment and government size results significantly, while the company’s assets-liability ratio and long-short term debt ratio are significant only in the fixed model, and GDP growth almost has no effect on the efficiency of investment. Combined with the results of other scholars, this paper briefly analyzes the impact of these factors to the efficiency of local government financing platform for investment mechanism.The final chapter is policy recommendations, that lists a number of suggestions to improve the efficiency of investment and to reduce the risk of local debt. Finally, we discuss the future research proposals and prospects for government financing platform.In this paper, we provides a scientific theory to evaluate the investment efficiency of financing platform. We analyze the evaluation score based on empirical model and impact factors to enhance the efficiency of government financing platform,including the transformation of government functions, straightening out relations between government and enterprises; promote the level of market for local government financing platform, to attract private capital into public infrastructure services; guide the flow of funds with financing platform; strengthen debt constraints for financing platform; improve information disclosure mechanism of local government financing platform; accelerate the.integration of local government financing platforms and so on. In a word, we offer a practical guide to government financing platform to improve their own operational efficiency and achieve healthy and sustainable development.