The Credit Risk Measurement Of Loal Governmental Debt

Since2008, our government launched a economy stimulate plan which has a size of4trillion. Over the next few years, in order to support the economy development, local governments got a large-scale financing by ways of obtaining loans, establishing financing platform companies, ect. Under the background that gross debt scale has a rapid expansion, the local government debt problem attracted a serious attention. The research on the local government debt credit risk measurement is more important than ever.This article sorted out the conceptual of the local governmental debt, determined the caliber and the scope of the government, and analysised the size and status of the report from National Audit Office in2011.Besides, this paper analysised the models of credit risk measurement, classified the models into traditional method and modern method. Traditional method contains expert score, rating methodology, credit score, etc. Modern method contains structural model, simple model,hybrid models, etc. The author summarized the advantages and disadvantages of both. In the fourth and fifth parts of the article, author brought the above methods into practical application combined with our national condition. When measure the credit risk of local governments in traditional method, author proposed the standards to select the evaluate indicators, selected several indicators to measure the governmental credit risk, determined the weight of each indicators, got the Distances to Default, and finally analysed the final result. In the process of measuring the local governmental credit risk using modern method, this article corresponded the financial indicators in government with the financial indicators in enterprises which are popular used in classical KMV model, estimated some of the indicators which is not counted by National Bureau of Statistics, and finally got the coarse-caliber calculate result of the local governmental credit risk.In the end of the article, though a summary of the experiences and lessons learned from western countries, author made a number of recommendations on how to management local governmental debt in our country.