Risk Assessment And Control Of The Local Government’s Investment And Financing Platform In Our Country

Currently, the financial system of our country putting financial rights to the central government, but leaving most entity to the local governance, causes the problem which finance rights and entity of local government are seriously mismatch. Especially in 2008 after the outbreak of the global financial crisis, the Chinese government launches a fiscal stimulus policy. Most of these funds are mainly added by all levels of local finance supporting funds. Budget Law of our country, however, makes clear regulation, in addition to the special provisions, the local government may not issue local government bonds. At the same time, due to the decline of economic growth and structural cutting policies in our country tax, the decline of the local fiscal revenue faces the enormous decline. Local governments are in trouble. In this background, in order to alleviate the pressure of the local fiscal expenditure, local government must innovative financing, broaden the financing channels, So the local government’s investment and financing platform arises at the historic moment.However, because the local government’s investment and financing platform mainly invests in infrastructure which are these quasi public welfare and public welfare projects. The cycle is long and profits are low. They inevitably produce the loans risk that funds failed to repay. In addition, the local government’s investment and financing platform has the imperfect corporate governance structure, highly leveraged, nor-standard behavior and unsteady income source which will lead to a apparent platform risk. Therefore, how to standardize the investment and financing platform company, and control company risk of platform,has become a very urgent research topic.At first, this paper expounds the scope of investment and financing way of investment and financing platform of local government. Then review the operation mode of local government’s investment and financing platform in China. On the basis of it, this paper studies the financial revenue and expenditure, loan balance, debt debt servicing ratio and etc. of local government’s investment and financing platform in China. Then, this article analyzes the main risk in the development of the local government’s investment and financing platform, such as bank loan risk, city investment bond risk,investment risk, etc., and analyzes the reasons of these risks, and briefly expounds the four possible conduction paths of platform risk. Then, his paper summarizes the measurement methods of credit risk and investment risk which are frequently used, and then according to the particularity of China’s local government investment and financing platform, designs fuzzy comprehensive evaluation model for China’s local government investment and financing platform risk. Finally, aiming at the existence of a variety of explicit and implicit risk for our local government’s investment and financing platform, we strengthen the risk control platform from two aspects of internal control and external supervision, and adopt a series of risk control measures, such as deepening the reform of financial system, improving repayment guarantee mechanism of the local government’s investment and financing platform and reforming investment and financing system of local government’s investment and financing platform in China.