Research On The Debt's Risk Assessment On Chinese Local Governments

Debt issue as the concept of "The financial issues should.be solved jointly all countries in the world.”has drawn the attention of each country.However,the key point in the financial issues lies in the debt risk.It is not only an important research field of modern economics and but also a significant theoretical frontier.The debt risk can be classified into central government debt risk and local government debt risks.Although the local government debt risk mainly occurs in local areas under the most conditions and has a direct impact on the regional economy only,the stable operation of local.finance system as an integral part of national finance system will have a direct influence on the stability and development of central finance system.In recent ten years,some progresses have been made through the discussion of domestic and foreign scholars on debt risk theories and the disputes on debt risk issues have also not been interrupted to generate many rational theories and viewpoints.However,due to restriction of various factors,most of researches still focus on the central government debt risk and the researches on local government debt risk are less.Therefore,a comprehensive and systematic theoretical system.has not yet been formed.The author hopes to discuss the theories and practices on local finance risk deeply for purpose of finding out the root causes of local government debt risk.Firstly,the author reviews the theories related to local government finance risk and debt risk deeply and respectively based on the risk theories,presenting the specific expression and characteristics of these two kinds of risks respectively and summarizing the difference and relationship between them.And then the author studies the formation mechanism of local government debt risk based on the economics theories and by means of principal agent theory,inverted soft budget constraint theory and information asymmetry theory.Secondly,the author studies the management conditions of government debt of representative regions including Euro-zone,the United States and Latin America widely and sorts them to summarize the advanced experiences of foreign governments in government debt management.Thirdly,the author describes the debt growth conditions of nine cities and areas of Jilin province from 1997 to 2013 by reference to the findings of National Audit Office of the People's Republic of China on nationwide local government debts in 2011,analyzing the current situation of the debt capital source and investment of nine cities and areas and performing preliminary analysis of debt risk.Finally,the author establishes a relatively-complete local government debt risk evaluation system,building an AHP-based fuzzy synthetic evaluation model according to the experts' advice and evaluating the local government debt risk of nine cities and areas of J province in 2013.Based on the above-mentioned parts,the author proposes the suggestions on copying with local government debt risk from the view of strengthening the local financial revenue and expenditure management.The innovation points of the author are mainly reflected in the following several aspects:(?)The research of governmental debt's risk is systematicalCurrently,there are many researches on local government debt risk,but they are not systematical.Such as the connotation,characteristics,description of current situation and formation mechanism of local government debt risk and how to prevent and solve the local government debt risk.This article focus on the debt problem along the line of economic operation,fiscal operation and debt operation.From the connotation to characteristics,and from description of current situation and formation to the prevention and solution of the local government debt risk,the article forms a logical chain.(?)Establishment of the theoretical framework of local government debt risk evaluationThe researches of our academic community on local government debt risk evaluation are still at the preliminary stage,and the evaluation theories,methods,index systems and judgment criteria are also not yet complete.Moreover,the evaluation indicators are not designed in a scientific and comprehensive way.The paper establishes a basic framework of local government debt risk by combining overall level with project level,analyzing and discuss the connotation of local government debt risk evaluation systems,targets,procedures and methods and building a relatively-complete local government debt risk evaluation index system in a qualitative way.(?)Establishment of the local government debt risk evaluation modelThis paper sets Jilin province for an example,making use of relevant data for 2012 and finding out 25 common factors including scale risk factor,debt repayment factor,default risk factor and structural risk factor for predicted indicators based on the qualitative index system.It adopts the SEM-based AHP evaluation method,discussing the establishment of local government debt risk evaluation model and predicting the local government debt risk of each city and area of Jilin province in 2013.(?)Construction of the local government debt risk evaluation systemCurrently,local government has widely improved its debt management consciousness,but since its supporting systems are still not established,so the debt risk evaluation and monitoring are difficult to be performed completely.Therefore,the paper proposes a series of suggestions on the construction of local government debt risk evaluation system.