A Comparative Study On Financing Risks With Universities Governed By Gansu Province

In response to relieve problems caused by "enlarged enrollment", such as the lack of teaching facilities, bank loan has become a general way of funding for infrastructure constructions in high school. As a result, loan repayment came into its term since2008. Principal, however, is left unpaid by most universities as their income from government budget and school fees are of great limitation. Plus commercial banks are getting more aware of financial risks under global financial risks from2007; loans to university are more carefully examined with caution. Then breaks in finance chain caused by heavy liability are significantly to impact a healthier developing state of China’s higher school education. This research is of great significance in reality.This paper conducted a computing analysis over the quota for financial risk evaluation via relative financial theories and the current situation, and analyzed the causes of current risks together with prevention methods for provincially governed universities. This paper has five parts:the first concerns research background and meaning. The starting point is giving by reviewing university financial risks home and abroad; the second is the theoretical foundation, namely property right theory, the principal-agent theory, the capital structure theory and financial risk control theory, which studies theoretical support for financial risks in universities. The third part focuses on the selection and definition of evaluation index that is based either on the repaying ability or the running efficiency of universities directly influencing the repaying ability. With the index system established in part three, the forth is an empirical study over financial risks with ten schools in Gansu. The fifth analyzes the causes and controlling methods of financial risks with universities governed by Gansu province. This paper, finally provides prevention and controlling methods for universities in financial risks with a point of view in combinations between government departments, universities and financial institutions.The innovative point in this paper lies in the specified study conducted for university financial risks in Gansu province and the index system concerning the evaluation of university repayment ability, which is taken in consideration of the special properties of accountancy of non-profit institutions. The limitation is that its index system and application in other provinces is not fully tested due to personal ability.