A Study On Warning System Of Local Government Debt Risk In China

In recent years,although our country has strengthened the local government debt risk management work,but there are still inadequacies in the study of the early warning system of local government debt.Most local governments in China are not aware of the necessity to establish the local government debt risk warning system,and there are still many problems in the debt risk warning work.Not only are there many shortcomings in the construction of the index system,but also the lack of risk alert supervision,only individual local governments established the risk early warning mechanism,the debt risk information disclosure system is not sound,inevitably,there is a lack of clear judgment on the risk of local government debt.The establishment and implementation of the scientific local government debt risk warning system,not only can we learn about local government debt risk in real time,but also improve the openness and transparency of local government debt in our country,and then reduce the risk of local government debt,ensure the prosperity and stability of the financial system and the smooth operation of the economy.Based on the domestic and foreign research,this article construct the China's local government debt risk warning index system from four aspects: the index of local economic development,the income and outcome of local government,the local public risk and the debts of local government.Apply factor analysis to get the analysis results which include three common factors and the comprehensive factor score.Then combine this results with BP neural model,we studied the nonlinear simulation of the local government debt risk of China in 2016.The empirical results show that: Firstly,factor score table shows that,the scores are higher in 2009,2011,2014,2015,which reached the maximum in 2014,while relatively lower in 2010,2012 and 2013,and 2013 is minimum.Thus,in 2009 to 2015 China's local government debt scores is in a rather unstable state with a large fluctuation range.Secondly,from the three common factors,the local government debt and financial risk,Z1,is higher in 2014 and 2015;the local macro public economic development risk,Z2,is higher in 2009,it shows that the risk of China's public economic development is higher in 2009;the local contingent liabilities' risk,Z3,is higher in 2014 and 2015,explain that the local contingent liabilities' risk is not optimistic in the past two years.Thirdly,The prediction based on BP neural network model shows that the risk of local government debts in 2016 is in the high range,which means that the risk of the local government debts was kind of big and we cannot overlook it.For the possible risk of local government debt,we should improve the early warning index system of local government debt risk.Including the establishment of local government debt risk early warning and the supervision of laws and regulations,set up a risk alert monitoring mechanism,government debt risk warning mechanism of linkage,improve the local government debt risk information disclosure system,reform the financial budget.