Local Government Financing Platform Credit Risk Analysis

Local government financing platform is an innovative financing mechanisms, whichestablish by local government to solve the shortage of funds and service the local economicconstruction. In response to the global financial crisis, China adopted a4trillion economicstimulus plan and implemented active fiscal policy and moderately loose monetary policy in2008, making credit increases rapidly. The local government establish financing platform togive the large-scale financing service. The government financing platform play an importantrole in the local government financing service. It play an important role in the local economicdevelopment and promote municipal construction, especially in alleviating local governmentfinancial pressure, coping with the financial crisis. In the recent years, the local governmentexcessive debt, information opaque of platform lead to the potential financial risk and creditrisk increases. In this thesis, we began with the analyzes the background and development ofthe financing platform, then does the pratical study on the potential risk from the financingplatform and the risk factor from platform, bank and government aspects. then from the creditrisk management theory and risk measurement method of using improved the KMV model,which puts in Jiangxi province local financing platform loan credit risk, the paper makes anempirical analysis of local government with scientific measure risk financing platform. Finally,based on the above analysis, we draw a conclusion that we should take scientific and rationalapproach to deal with government financing platform to promote local economic and socialsustainable development.