Study On Financial Risk And Related Prevention Measures About Chinese Local Finance

Financial risk is a critical category in modern finance, and it is also an important frontier theory in studying and develpoing modern finance. Evading the problem of financial risk, which exists through the financial activities of the governments all over the world, is becoming one of the most important theoretical bases in formulating financial policies, designing financial systems, organizing and arranging financial revenue and expenditure structures, as well as carrying out financial budget management etc. Financial risk includes central financial risk and local one. Local financial risk is focused on some areas, and only directly affects the regional economy in most cases, however, because local financial system is an organic part of the state financial system, whether it can be steadily and soundly developed or not will indirectly affects the steady and sustainable development of central finance.As the transition of economic system and establishment of public financial organization, many problems about financial risk such as the offside of financial responsibilities in the old system and the vacancy of that in the new system are becoming more and more conspicuous. In the current new financail system, public expenditure of the local government is beared by the local finance. Relative lack in the scale of local financial revenue and expenditure is becoming a problem during the development of local government and economy. At present, the heavy debt, the large- scaled financial deficit, the intensifying contradictions between financial revenue and expenditure, the lack in mechanisms for the steady increase of the financial revenue, and the heavy burden of the financial expenditure are continuously accumulated in most of the provinces and counties in our country. If the above poblems are not studied and solved, the normal operation and the reform and development of finance can not be achieved. Meanwhile, the sustainable, sound and rapid development of our national economy can not be guaranteed.Now, we have established the financial system managed by different levels. In the aspect of local financial risk, studying the problm exsited in local finance theoretically and practically, especially that of how to guard and resolve local financial risk to ensure the sound operation of local finance has its important theoretical values and practical meanings. In order to guard and control local financial risk, we must learn other countries'experience combined with the practical situation of local finance itself and the present situation of local financial risk to comprehensively analize the causes for formation of local financial risk, to put forward specific guarded measures that are more suitable for our national conditions to prevent and resolve local financial risk.