Study On Assessment And Early Warning Mechanism Of Local Government Debt Risks

With the rapid development of social economy and the expansion of city size, China’s scale of local government debt is also increasing, and it gradually becomes a major impact factor in China’s current economic recovery and system transition. At the annual meeting of the Boao in April2013, one of the sub-forum put the debt risks as the next flashpoint, and pushed our country’s condition to the forefront. Besides, in the2013draft budget of our country, it pointed out that we should strengthen the management of the local government debt at present, and should put a stop to some local government’s violations of commitment and financing behavior, then classify the debt payments into the government budget management, and build up a scientific and effective risk assessment and early warning mechanism. Only in this way, we can prevent the debt risks scientifically and effectively, then can assure of the smooth in our social and financial economy.While, on this condition, although theoretical study on the assessment and early warning mechanism of the local government debt risks in our country is not rare, but the method of assessment proposed is not clear or effective enough, and the early warning index system is not further detailed as well as the relevant system designing process. At the same time, the content is just a theory at a standstill, and is not closely connected to the reality, so it is not beneficial to construct our country’s local government debt risks assessment and early warning mechanism, which is suitable for the local economic strength and the local social development, and it is not beneficial to look out for an effective way to solve government’s practical problems, too. On this situation, I choose the local government debt risks as a specific research object in this article, aiming at the assessment and early warning mechanism of the local government debt risks for research and analysis. I hope this way will contribute to the risks control and prevention management for the local government’s need.In particular, this article can be divided into six parts:Chapter one is the introduction, which not only introduces the background, domestic and foreign research review, research ideas and research methods, but also makes a brief description of this article’s innovations and deficiencies.Chapter two is a theoretical framework of the risk assessment. This part begins with the concept of risk and uncertainty, and it defines the connotation of the local government debt risks under the assumption of the government’s double take. At the same time, this part puts forward the matrix of our country’s local government debt on the basis of the debt’s classification, combined with the local government asset matrix, which refers to Hana’s fiscal risk hedge matrix, in order to give a roughly assessment of our local government’s debt risks by way of the balance evaluation method.Chapter three is the design of relevant early warning mechanism. This part is based on the preceding introduction about the early warning mechanism of the local government debt risks, and it emphasizes that we should build up the early warning mechanism according to our country’s actual conditions. Besides, this part also makes a full set of the index system, which is related to the early warning mechanism of the government’s debt risks, then follow that, it presents the selection principle and the selection method of the index system, and also presents the method of weight determining and interval determining.Chapter four is an empirical evaluation of the local government debt risks. This part is the specific empirical analysis of the above theories in chapter two, which is on the premise of the clearly statistics of the local government’s debt condition and asset condition, and on the basis of the accurate judgment of the local government debt risks current condition and future trend by taking the relevant index into account.Chapter five is the simulation of the risk early warning. This part puts forward that we should build up the early warning mechanism conditionally at first, then can begin to design a set of relevant index system, which means that on the basis of the known data from2006to2010, first we should screen out the simplified index by cluster analysis, then should give factor explanation and comprehensive evaluation of the selected index by means of determining critical values and using factor analysis. Besides, this part also presents BP neural network on our early warning study, in order that we can cope with the similar situation in future calmly and placidly.Chapter six is the supporting system construction of the local government debt risks assessment and early warning mechanism. This part mainly introduces the relevant system of this article, including the full-sized budget management system, the mid fiscal budget system, the government budget accounting system, the debt information disclosure system, the debt guarantee and service system, the debt risk supervision responsibility system and so on.