Research On Credit Risk Of Local Financing Platforms

The past 2020 was an unusual year.Faced with the great impact of COVID-19 on real economy,my country has adopted the “double loose policy”,that is,the combination of a positive fiscal policy and a loose monetary policy would affect the macro-economy.The counter-cyclical adjustment directly led to another rapid growth of Quasi-municipal Bond,and the number of Quasi-municipal Bond and financing scale reached new highs.the local financing platform raises a lot of funds for local governments through issuance of Quasi-municipal Bond,and has promoted the development of local economy.However,just in the past October and November 2020,Brilliance Group’s private placement bonds defaulted and the AAA-rated bonds issued by Yongmei Group failed to pay the principal and interest on schedule.The Brilliance Incident and the Yongmei Incident caused an uproar.The investors began to worry about the solvency of platform companies with large fluctuations in the market,which impacted investor confidence.Succession of mine explosions had to make people suspect the "Urban Investment Belief",Whether it has collapsed or not.This article uses this as the starting point for research.Based on serious debt burden of local governments,our country has attached great importance to the credit risks of LGFP.Starting from the financing behavior of LGFP,this article mainly conducts research on the potential credit risks behind the issuance of Quasi-municipal Bond.This paper sorts out the development history of LGFP and government debt,taking platform characteristics and operation mode into consideration,and makes a theoretical analysis on the risk of financing behaviors of LGFP.Selecting the KMV model of listed companies,and obtains the credit risk KMV of LGFP after improvement model.Taking the fiscal revenue and expenditure data of Hubei Province from 1994 to 2020 as a sample,using an autoregressive model to predict the fiscal revenue of Hubei Province in 2021,we have successively obtained guaranteeable fiscal revenue,as well as two key indicators of default distance and expected default frequency,and calculated Hubei Province The largest safe debt repayment scale in 2021.The empirical research tends to draw a conclusion that the improved KMV model can measure risk of platform better;fiscal revenue for guarantee exerts an great influence on the credit risk of LGFP;the credit risk of financing platforms are controllable on the whole;the uncertainty in the market is closely related to the credit risk of financing platforms;finally,putting forward some policy suggestions on how to effectively prevent LGFP from credit risks.