Risk Evaluation Of The Local Government's Investment And Financing Platform Based On The KMV Model

The local government's investment and financing platform is produced in the development of China's special financial system.It is an important institutional arrangement of the local government.In recent years,the loan's scale of the investment and financing platform is growing fast,raising a lot of money for the construction of the domestic infrastructure,which provides powerful support for our national economic and social development.However,the credit risk,due to the explosive growing debt in the platform,is gradually exposed,and the credibility lacking of the government due to the government's default has also caused widely concern of the public.The paper analyses the risk assessment and development direction of the local government comprehensively,based on the combining of the qualitative analysis method and quantitative analysis method.For the qualitative analysis,the paper summarizes the relevant research at home and abroad,reviewing the development process and the financing pattern of our local government's investment and financing platform.On the one hand,we recognize the transition role of the platform in the economic transition period,focusing on the analysis of the risks of refinancing and project funding chain scission because of the sudden halt.On the other hand,we analyses the possibilities of the default due to the debt of lager scale in the platform,from the refinancing risk,land finance and the tendency of companying.From the quantitative analysis,the paper summarize the domestic and foreign credit risk evaluation models.According to selecting the appropriate index,increasing the coefficient of the central government and social capital cooperation,we update the KMV model and do the empirical analysis by using the economic data of 20 provinces in China.Based on this,the paper points out a development path for the platform,from the three levels,which are the sustainable development,process control and the system reform.The paper believes that the key to improve the local government's investment and financing platform is to establish a diversified local government credit market,and make it standardized and orderly developed.