A Study Of The Construction Of The Great Local Government’s Financing Platform Credit Index System

The urban infrastructure construction experience of thedeveloped countries in the west shows that the government isunable to invest huge financial capital in a long-term to meet theneeds of the development of urban construction, let alone to avoidthe congenital shortage of government’s investment and operationmode. It will be casted away by other countries in the west for thesake of lacking enthusiasm and restraining force. However, westerncountries manage to carry a series of privatized reforms and end upwith a full success.China, as a socialist country, could not indeed turn the cityinfrastructure which as the public welfare project to privatization,or it will conflict with state system. At the same time, it also can’tensure the healthy and well-organized development of society andpeople’s livelihood and welfare. Therefore, the Chinese governmentsets up a local government financing platform which is led by thegovernment and operated by market by the way of learning from others’ strong points to offset its weakness. In the past ten years,the operating ability of local government’s financing platform andthe financial strength were improved continuously, along withChina’s accelerating urbanization. The local government began totransform from a single functional financing platform to acomprehensive investment platform, and transform from a rare andlarge provincial and municipal platform to a county-level platformon a national scale. The main purpose of the financing platform wasfinancing, but the financing platform had become a kind of specialfinancial entities, because of their special approval way of loans,the borrower properties, and the source of reimbursement way andguarantee means. Therefore, when the country tries to invest in amass of city infrastructure and local government bonds, especiallysome local governments began to face the risk of default; it leads toits special credit risk inevitably due to the particularity of financingplatform. So, the only way to ensuring the safety of the statefinancial system is to evaluate the financing platform’s credit.The disadvantages of credit evaluation which only referred tothe local government or financing platform originally has becameapparent, along with the risk of default of the financing platformbecome more clear and the reality that the state tried to distributelocal government debts. The paper thinks that the credit evaluationof the local government’s financing platform should not onlyconsider the local government’s financing platform, but alsoconsider that the local government has real affects on the credits offinancing platform. This paper establishes credit evaluation indexsystem for the local government’s financing platform, which set out from source of the local government financing platform’s credit.The credit evaluation index system based on local government’scredit, the credit of local government financing platform’s operationcapacity and the collectivized credit of local government financingplatform. The local government and local government financingplatform serve as the evaluation objects. In the research process,this paper tried to highlight the local government financing platformwhich is formed by the local government and financing platform. Itis similar to a group company entity. It presents its similarity to thegroup company widely and deeply. Then, it evaluated the great localgovernment financing platform’s credit according to the idea ofcredit which the commercial banks take to evaluate Group Company.In the end, it screened out the evaluation indexes in accordancewith the characteristics of evaluation subjects and thepredecessor’s research results. On the basis of that above, thispaper screen out and eventually build the great local governmentplatform credit evaluation index system through the relevantstatistical methods.This paper argues that the idea that to evaluate localgovernment’s financing platform by mature evaluation mode ofcommercial banks is feasible. The credit evaluation index system isbuilt in line with it. The credit evaluation index system can reflectthe existing credit problems and credit potential of the localgovernment and financing platform comprehensively andobjectively. It helps commercial banks to avoid credit risk, mine thecredit potential of local government and financing platform, securestable development of local economy and society and national financial security.