Study On The Risk Of Investment And Financing Platform Of Local Government Based On Entropy-Weight And Matter-element Model

The Local Government Investment and Financing Platform is a product with Chinese characteristics which is adapted to particular national conditions and system during the economic reform period. After The Reform and Opening Up, the needs of infrastructure construction rise rapidly with the high development of Chinese economy and society, however, the reform of Tax Sharing System led to the object power of local government smaller and the financial power bigger, at the same time, the Budget Law restrict the local government of borrowing hugely, the contradiction between the reality development demand and the shortage of funds becomes more and more obvious. To break the bottleneck of the shortage of funds, the local government begin to built the platform one after another, this situation reach its peak after the 4 trillion plan in 2009. Needless to say, the platform, on the one hand, broadens financing channels of the local government, alleviates local financial press, on the other hand, play an important role on local economic development and the urbanization and industrialization. However, the risk has been brewing behind the high-speed development, the internal operation of the platform is not standardized which causes the operating risk, the overindebtedness causes the debt risk and credit risk of bank system, those problems need be high concerned and solved.Firstly, this paper summarizes the concept of the local government investment and financing platform, sum up its definition, stage of development and the status quo, then, we analysis the behavior of building and borrowing by using the public goods theory, fiscal opportunism theory, herd behavior theory and game theory; Secondly, we summarize the risk of the platform comprehensively and deeply; Thirdly, it's the empirical analysis of this paper, we use the case of Chongqing which is one of China's four municipalities and the economic financial and innovation center in the western region. Chongqing began to build the local government platform which is represented by the eight investment and financing groups, also known as the eight groups. The eight groups' success patterns were widely imitated by the other local government. This paper analyzes the management model and business operations of the platform of Chongqing, then, summarizes its own risks and external risks that may arise. Afterwards, we select the Chongqing Land Group as a case which is a typical platform of the eight groups, make the real investigation of its risk, and give the corresponding risk prevention measures.Then, we select 21 representative Chongqing local government investment and financing platforms as the sample, construct the Entropy-Weight and Matter-element Model, make empirical analysis to the risk situation of Chongqing platforms, come to the conclusion that the risk situation of Chongqing platform is not satisfied. At last, we make recommendations about the risk control and management of the platforms from multi-angle.