Research On The System Of Issuing Local Government Bonds In China

From 2009 to 2014, Chinese local government bonds were tried and explored in two different ways, which issued by the Treasury Department and pilot local government themselves. Since 2015, the local government bonds in China entered the stage that provinces(autonomous regions, municipalities directly under the central government and cities under separate state planning) issue and repay by themselves. Now the Chinese local government bond issuance system have a basic shape already, but some elements of the system are still imperfect. Based on this background, the theme of this paper is established.In the process of the study, firstly, this paper summarizes elements of the local government bond issuance system. The distribution system is divided into the publisher,investors, bond issuance mode, product design, credit rating, information disclosure and distribution regulation etc. The basic analytical framework of the local government bond issuance system is formed. Then, through analyzing of the evolution of local government bond issuance system since 2009, guided by risk diversification theory, credit theory, KMV model and asymmetric information theory, the existing problems are summed up, which is the structure of investors is unitary, the scale of distribution is small, the proportion of special debt is low, there are still difficulties in resolving the underlying debt, the credit rating and information disclosure system is imperfect, and the relevant laws of local government bonds are imperfect. When this paper gets the conclusion that the scale of local government bond issuance in our country is too small, this paper uses the adjusted KMV credit risk measurement model and takes Beijing city as an example to do empirical research. After revealing the problems of existence, the causes of each problem are analyzed and relevant conclusions are drawn. In view of the above problems and causes, this paper draws lessons from the experiences of the United States, Japan and some European countries. Finally, in the fifth chapter, this paper puts forward some policy recommendations: about the local government bond investors structure, this paper suggests encouraging non-bank financial institutions to actively participate in through policies and designing the "savings of local government bonds" to attract private investors. About the bond issuance scale, this paper suggests expanding the size of the bond properly on the basis of perfecting system of dissolving existing debt and combined with the model and the corresponding debt warning indicator to prevent debt risk. On the special bonds, this paper suggests increasing the proportion of issue according to the different characteristics of government funds. About credit rating and information disclosure, this paper suggests improving the quality of local government bond credit rating and local government information disclosure system.Meanwhile,a sound legal system of local government bonds is also needed to establish. At the same time, this article introduces the mature local government bond sinking fund system in foreign countries as an important supplement to the current system of our country.Generally speaking, Chinese current local government bond issuance system is still in the early establishment, there are still a lot of contents needed to constantly improve and supplement. This paper presents relevant policy recommendations according to the current problems and hopes to help promote the further improvement of the system.