The Local Government Financing Platform For Risk Management

Relying on the local government financing platform, local government has efficiently relieved from its deficit while still supporting an expanding fiscal policy, this has promoted the process of urbanization and improved infrastructure extensively. In doing so, such platforms have successfully help our government to avoid a recession. However, it comes with various risks and might create many hidden prices for us to pay, and ultimately affects the growth of our economy in the long run. Therefore, a detailed investigation of the local government financing platform is urgently needed, and it has both theoretical and practical significance. By understanding the risk factor and investigating existing methods of managing such credit risk involved in the local government financing platform, this thesis offers solutions to avoid unnecessary risks and promoting ideas and policies that lead to a better financing platform and a sustainable growth in the future.In five chapters this thesis covers both the phenomenon and essences of the local government financing platform. The first chapter includes some background information, some relevant theories and mathematical models.An international as well as a domestic literature review are given, and the recent development in the field of the local government financing platform are discussed in detail. In the second chapter, the history and the development of the local government financing platform in China are provided. The third chapter analyzes several aspects of the local government financing platform in depth. The aspects include its characteristics, the source of the risk, the transference of the risk, the effect of the risk, tools to manage the risk and et cetera. The fourth chapter uses district Putuo as an example to illustrate the risk management of the local government financing platform. In the last chapter, a conclusion and a discussion of the future of the local government financing platform are presented.