The Research On The Assessment Of Chinese Local Government Debt Risk

In recent years,domestic local governments have to augment the construction of infrastructure to match the rapid development and improve people's living conditions.However,in the face of the financial power do not match the administrative powers of local governments,the deficit of local governments keep expanding with limited sources of funds under the strict budget law,local governments have to raise a debt to meet the developing funds requirement,which leads to a great increase in contingent liabilities.By the end of 2017,the local government debt has scaled 16.47 trillion yuan.In addition,without effective supervision and disclosure system people gain no access to the accurate information of local government debt.After several years of rapid accumulation,the scale of local government debt contains great risk which has not been paid much attention to.In this case,it is of great significance to study the present situation of local government debt and measure the scale of debt that local governments can bear.This article consists of five parts.The first part will elaborate the background and significance of the study.The second part will introduce the related theoretical results of local government debt.The third part will analyse the present situation and cause of local government debt combining Specific data,the present situation aspect includes debt scale,funds source,obligor and debt concentration level,while the cause aspect includes unmatched financial powers and administrative powers,political system and macroeconomic policies.The fourth part will do empirical analysis with the latest debt data of Shandong province based on the improved KMV model..In the empirical analysis,we calculate the excepted default probability and distance to default under different debt scale from 2018 to 2020.The results show that the debt risk of Shandong province is in a controllable range and the excepted default probability is ignorable.The fifth part will list policy suggestions for the government from three aspects:perfecting system,strengthening supervision and improving macroeconomic control.