Local Government Bond Credit Risk Measure Based On KMW Model And Regulation Research

In 2011, "national economy and social development in the Twelfth Five Year Plan" clearly put forward "to further the reform of the financial system continued to deepen, to explore the local government to issue bond system construction, establish and perfect the management system of local government debt." The Ministry of Finance in the same year introduced the "2011 their own local government bond issuance pilot approach", Zhejiang, Shanghai, Shenzhen, Guangdong, after the approval of the State Council as can be the first to carry out its own local government bonds pilot provinces. After two years, approved by the state council, appropriate to expand its own debt pilot area, jiangsu province, shandong province become the new bond issuance by the pilot. In May 2014, with the approval of the State Council, Ministry of Finance released the 2014 local government bond spontaneously from the pilot scheme "(hereinafter referred to as" pilot "), in Shanghai, Zhejiang, Guangdong, Shenzhen, Jiangsu, Shandong, Beijing, Jiangxi, Ningxia, Qingdao ten provinces and cities launched local government bonds spontaneous pilot. In August 31 st of the same year, the Standing Committee of the National People's Congress voted to amend the budget law of the People's Republic of China.. The new budget law for local debt management budget supervision of the "magic spell", standardize the management of local government debt, and strictly control the debt risk, establish government bonds as the main local government debt financing mechanism, is conducive to the people's congresses and social supervision, prevent and resolve the debt risk.In this context, to further promote local government bonds in our country, the local government bond market development, local government bond credit risk control and regulatory issues will be facing the top priority.At this stage of local fiscal revenue and expenditure gap bigger year by year, at all levels of local government debt accumulated a sizeable pressure.If you are unable to be innovated the existent hidden debt or can't remove the circumstances, to large-scale issue local government bonds is likely to make the local government debt scale is out of control, thus bring huge risk of local finance.Therefore, using the suitable credit risk measurement model to measure credit risk of local government bonds, and establish the effective control of local government bond credit risk supervision mechanism is necessary.Based on the above analysis, combined with regulatory situation and existing problems of local government bonds, mainly from the local government debt risk of government regulation and market discipline mechanism two aspects, considering the pertinence and feasibility of the policy recommendations, to the local government bond credit risk control and supervision.