Western Areas "provincial County" Financial Reform Risk Early Warning Mechanism

“Direct provincial supervision of county “fiscal reform is to enhance the vitalityof the county’s economic development, strengthen county economies of scale.Implementation of the “Direct provincial supervision of county “fiscal reform aremainly concentrated in the eastern region, Zhejiang, Hubei, Shandong, Liaoningfrom lower administrative costs, promote institutional innovation, strengthen countyeconomic point, have launched the “Direct provincial supervision of county “fiscalreform, in the specific design of the system has a lot of innovation,in the specificationprovincial, municipal and county levels, intergovernmental fiscal relations, economicdevelopment, mobilize the enthusiasm of local governments to improve managementefficiency has made some results. However, the majority of the western regionpopulation scattered of distribution, low level of public services, in size and level ofeconomic development of urban construction with the eastern and central regionshave a larger gap, requiring local conditions, step by step, in order to avoid variousrisks generation. How to understand the western region “Direct provincial supervisionof county “reform, explore its possible risks faced in the reform process, and toestablish risk warning mechanism has become the main direction of research. Risk ofserious harm to the financial system, should the lack of timely control and defuse, willspread to all aspects of social and economic. Basic level is the foundation of nationalfiscal, which is a prerequisite for the healthy operation of the entire state financesustainable development. So the “Direct provincial supervision of county “fiscalrestructuring and reform of the financial situation at the grassroots largely determinesthe overall reform success or failure. Local governments are facing great opportunitiesand challenges, in the reform process may encounter various risks. Local governmentshow to establish a risk warning mechanism to prevent risks arising in the course ofreform, to avoid crisis bursts are an important issue.This paper defines the financial system risk, analysis the characteristic of “Direct provincial supervision of county “risk and the formation mechanism of risk. Throughthe financial risks in the reform process could face analysis, management risk,economic risk, social risk four categories of risk, selected with the correspondingindicators by cluster analysis of indicators for processing, can be constructed thecounty “Direct provincial supervision of county “early warning indicators offinancial system reform risk. Fuzzy comprehensive evaluation method to build a“Direct provincial supervision of county “financial risk early warning systemmodel,selected statistical data about financial, economic, social of the index system,analysis of30counties reforms may judge the level of risk faced. According to theresults of empirical analysis, there must be supporting fiscal reform andadministrative reform in order to obtain satisfactory results.