Loans Risk And Countermeasure Research Of Local Financing Platform Of Commercial Banks

Since 2008,in order to cope with the financial crisis and promote economic growth,local governments have raised funds through various types of financing platforms,and the number and debt scale of financing platforms have obtained in explosive growth.However,China’s local debt risks continue to gather due to the long financing cycle and unapparent source of repayment of local debt.Since the cleaning and regulating work of local government financing platforms organized and carried out by the State Council on June 2010,over-investment phenomena beyond the local financial resources have decreased.Although,the total amount of local government debt is within the pre-control range,the hidden risk is very large.At present,the local governments mainly acquire financing funds from the bank through the local financing platforms.The government’s high debt is not only the burden of government,but also the hidden risk of commercial banks.If the high debt is not properly coped with,it will cause huge losses or even bankruptcy of the bank.Through combing the development process of the local financing platform,this paper studies the financial decentralization theory,the corporate governance structure,the risk management and so on.Local financing platform refers to the local government to take responsibility in the form of fiscal expenditure which can participate in the loan,the platform of enterprise career and each institution’s operation,the local government can be settled in the state-owned shares,through the allocation of land and into the financial funds to promote public asset allocation.In order to expand the scale and strengthen the cooperation between banks and governments,commercial banks actively expand the loan business of local financing platform,and are faced with the risks of policy,legal risk,credit risk,governance structure risk and high capital consumption.In this paper,the author combs the development course of local financing platforms,and researches the corporate governance structure and risk management combined with the theory of fiscal decentralization.Local government financing platform means that the local government bears the responsibility of repayment in the form of fiscal expenditure,business and various organs can participate in the operation of the platform,the local government can own state-owned shares and promote the reasonable allocation of public assets through the allocation of land and the investment of financial funds.In order to expand the scale and strengthen the cooperation between banking and politics,commercial banks actively expand the loan business of local government financing platforms,thereby facing policy risk,governance structure risk,credit risk,legal risk,high capital consumption risk and other risks.In this paper,taking H Bank as an example,the author analyzes the structure and management requirements of risk loan business of local government financing platforms.Combining with the latest policies,the author tries to propose practical and feasible risk prevention measures such as changing business development strategy,accelerating the bond replacement,optimizing credit structure and strengthening regulatory information exchange of the same industry for commercial banks from the aspect of risk management of local government financing platforms.The author aims to gradually improve the risk control level of commercial banks,eliminate the hidden risks of commercial banks and optimize the allocation of financial resources.