The Research On The Risk Of Local Government Debt

Since the outbreak of the financial crisis in 2008,at the same time of the vigorous development of the local economic in China,the scale of local government debt has expanded dramatically.It has become a major issue that cannot be ignored in the normal operation of local governments.From a global perspective,the European debt crisis,which began to expand from Greece,also sounded the alarm for China.How to prevent local government debt risk has become an important issue facing the current government.Zhejiang Province is located in an economically developed eastern region,which has start piloting the issuance of local bonds.As of the end of 2017,the scale of local government debt in Zhejiang Province was 923.09 billion Yuan.The local government debt risk is also increasingly prominent.Therefore,the calculation of debt default probability across Zhejiang Province is carried out.The research content of this paper is mainly reflected in three aspects.First of all,This paper conducts an in-depth study on local government debt risk based on domestic and foreign literatures,and explains in detail from the perspectives of government debt risk related concepts and risk analysis.Secondly,according to the local government debt data released by Zhejiang Province,a multi-level analysis of the local government debt risk situation in Zhejiang Province is conducted.Based on this,the local government debt risk situation in Zhejiang Province is analyzed and evaluated.In general,the debt risk is controllable.Thirdly,taking the local government debt balance and solvency of each city in Zhejiang Province as the research object,the KMV correction model is used to calculate the probability of local government debt default in 2016 and 2017 and the security scale of local government debt in 2018.In the case of maximum solvency,the local debt default probability of each city is extremely low.In the case of conservative solvency,some regions have certain debt default risks,especially in Quzhou,Lishui,Zhoushan,where local government debt exists in the future.There must be a default risk,and specific measures must be taken to control the expansion of the debt scale.