Research On The Financing Risk Game Of Credit To Railway PPP Mode

As the backbone of the transportation system in our country,railway plays an important role in promoting development of economy.At present,the construction of railway is completed by the government which causes a big gap between supply and demand.Therefore the government needs to expand the sources of funds soon.The PPP mode is a new financing model,which has been applied in infrastructure constructions of the whole world and has achieved good results.By introducing the PPP financing model and the railway industry,this paper analysis the risk which could happened in railway PPP project.Basing on the game theory,we will analyze the mechanism of railway PPP financing model and the measures which the project participants may take to cope with different situation,in order to solve the problem of railway construction fund shortage.The paper defines the public sector of railway PPP project as the demand side of railway infrastructure construction.Through cooperation with social capital,and sharing the risk and profits,the financiers can provide railway transport service and increase social total benefits.This paper first introduces the theory of asymmetric information and opportunism behavior theory,and thinks that these two kinds of situations exist in the railway PPP project.Subsequently,the paper analyzes the characteristics of the railway and market environment.On this basis,the paper argues that there is information asymmetry between the project participants,the change of market demand and the incompleteness of the contract may aggravate the degree of information difference between the public and private parties.This may encourage the private sector to take opportunistic behavior in the project process,leading to adverse selection risk,credit risk and moral hazard.Then,this paper analyses the formation mechanism of the related risk and establish the game model.Finally,through the introduction of the BOT project in Taiwan,the impact of these risks in the project is analyzed.In this paper,we found the public sector can use establishing reputation mechanism,subsidies,reward punishment measures and more fair distribution ratio of excess earning to encourage private sector participation in the PPP projects,increase investment,reduce the risk of default,and ensure the completion of the railway project.Finally,we hope that the conclusions and recommendations can provide a reference for introducing social capital into railway projects of China.