The Research On Measurement And Evaluation Of Local Government Debt Default Risk Based On KMV Modified Model

According to the data released by the National Audit Office,by the end of June 2013,the national local government debt reached 10.9 trillion yuan,and the annual growth rate of local government debt reached 27.38% from 1997 to 2013.Based on this,the country has been aware of the potential huge risks of local government debt in recent years and has introduced a series of new debt management deals to respond positively.Under this background,it is very important to comprehensively analyze the solvency of local government and assess the risk of local government debt default.Based on the dual dimension of flow and stock,this paper constructs the framework of local government solvency,establishes the KMV modified model on the basis of reflecting the difference of growth rate and volatility of three kinds of different solvency,so as to study local government debt default risk under the background of New Debt Management Policy.With regard to the risk of explicit debt default by local governments,the study found that if local government debt stock replacement was not taken into account,the risk of debt default in the provinces of 2015 and 2016 in the case of conservative solvency was higher,and the risk of debt default in the middle and western regions was generally higher than in the eastern region;and compared with the general debt,the probability of default on the specific debt of each province is lower;If the issue of local government debt stock replacement is taken into account,in the short term,debt replacement can indeed significantly reduce the risk of default of local government debt in each province,but in the long run,this replacement will not fundamentally eliminate the liability for repayment of debt and the risk of default;The change of different solvency growth rates during 2017-2022 has different dynamic impacts on local government debt default risk.The impact of liquid state-owned assets realization and fiscal guaranteeable income is relatively large,and the impact of fund solvable income is relatively small;Under the scenario of the growth of the established solvency based on the government budget plan,compared with the average debt repayment period of three years,when the average debt repayment period is six years,the existing government debt repayment capacity can roughly cover the actual debt balance limit set by the current budget.Thus,the estimated security scale of local government debt in 2017 has been significantly improved.Debt deviation rate and default risk rule decreased significantly.With regard to the risk of implicit debt default by local governments,the study found that: The local government has the largest stock of hidden debt in the eastern region,and the hidden debt of local governments in the western region is growing faster.The default rate of hidden debt under conservative situation is significantly higher than in the case of optimism.According to the dynamic effect of the change of different solvency growth rate on the hidden debt default risk of local government,the influence of the liquidity of the mobile state-owned assets and the disposable financial resources of the local government budget is greater,and the influence of the income of the borrower's main business activities is relatively small.Based on the above conclusions,this paper further puts forward some preventive suggestions on the risk of default of local government debt: further perfecting the financial system,enhancing the ability of local government to repay debt from the root,and then relieving the debt pressure.And we should steadily defuse the hidden debt stock and resolutely curb the increase of hidden debt.