Research On Risk Assessment And Early Warning System Of Local Government Debt In China

Since the tax reform in 1994,the local government in China has been faced with the problem that the financial income does not match.the governance and finance unreasonable division makes the local government facing a huge challenge while developing the local economy,especially in recent years,China's economic development throughout the rapid.In order to adapt to the speed of economic development and improve people's livelihood,local governments have been accelerating the construction of infrastructure,resulting in increasing demand for local government funds.The new budget law,which came into effect on Jan 1,2015,allows local governments to issue bonds within the limits allowed by the state council,so the funds raised are limited.The part exceeding the quotascan only adopt flexible measures to set up financing platform companies to conduct debt financing by means of urban investment bonds and trusts,which,to a certain extent,has helped promote the development of regional economy and the improvement of people's lives.However,due to the lack of necessary legislative norms and effective supervision of local governments,local governments have formed a multifaceted and disorderly financing situation,which is followed by explicit and implicit borrowing of local governments,and the explicit and implicit debt burden is increasingly serious.The financial distress of local governments,their limited debt paying ability and increasingly prominent debt risks,may threaten the economic and financial stability.The local government debt risk problem has become an inevitable social fact in our country.Since the local government debt problem is unavoidable in China and has already formed risks on a huge scale,it is preferred to face it openly,regulate it clearly and manage it carefully rather than to hide it stealthily.The local government should take measures to standardize and strength debt management,in order to ensure the smooth operation of economy and finance.For that,how early warning on the risk becomes particularly urgent.In such circumstances,I take Liaoning province as an example to analyzes the causes and current situation of government debt in Liaoning and study the early-warning system of local government debt risk,hoping to help local governments to give early warning of debt and take corresponding measures to prevent risks timely.The first chapter,I start from the topic selection,analyze the background and significance of the research content,literature review at home and abroad,research ideas and methods,and make a brief description of the innovation and shortcomings of this paper.Then,on the basis of clarifying relevant concepts,I expound the reasons why local governments borrow a lot from two aspects which are local government financing behavior and institutional basis.The third part mainly carries on the practice analysis to government debt risk of Liaoning province.Firstly,from the perspective of the causes of debt risk,from four aspects:financial system factor,administrative management system factor,debt management system factor and macro policy and economic factor.Then it analyzes the government debt status quo of Liaoning,and explains the debt risk status with data from five aspects:debt scale,main borrower,main borrower,debt source and destination,and points out that the debt risk situation is quite severe.Finally,it explains the impact of local government debt on local economy from positive and negative aspects.The fourth part in this paper is the empirical research:Research on the early warning system of local government debt risk.Firstly,the principles of relevant indicators are defined and indicators are selected.Then,the questionnaire was used to score the previous selected indicators.Then factor analysis method was used to reduce the dimensionality of the selected indicators and obtain the main indicators of risky debt.Finally,comprehensive evaluation was conducted on these indicators to analyze the risk of government debt in Liaoning province and draw a conclusion.At last part of this paper,based on the above analysis,I make some political suggestions on how to prevent the local government debt risk from the aspects of debt scale,main body of debt raised and debt management.