The Local Government Debt Risk Research Based On Modified KMV Model

After 2008,with the implementation of a proactive fiscal policy,the central government has stipulated that the Ministry of Finance can issue local bonds,which has caused local governments to fall into a frenzied debt-raising model,and local government debt risks are accumulating as the size of debt increases.According to the latest data,as of 2018,the national government debt balance has reached as high as 18.39 trillion yuan.With the spurt of local debt growth,the Ministry of Finance has successively issued a series of documents such.Spend all efforts to resolve debt risks.As of September 2018,the balance of S provincial government bonds was 585.6 billion yuan,while the local fiscal revenue of the province was 224.3 billion yuan,a huge difference with its bond balance,and there is still a growing trend.Therefore,the local government debt risk of S province has become an important issue that plagues its economic development,and it is necessary for further analysis and research.This paper first reviews the relevant literature on local government debt risk,and analyzes the measurement methods and management measures of local government debt risk.While reviewing the existing literature,we have found the omissions and deficiencies of the existing research,and laid a solid literature foundation for the next research in this paper.Secondly,the research object introduced in this paper-S province,through the description of its recent bond issuance,details the scale of S provincial local government debt,debt limit,borrowing main body and the financial level of the provincial and subordinate cities.The gap,at the same time,this paper starts from the strategic background of S Province as a key link of the Silk Road Economic Belt and the task of concentrating the construction of the national central city in S Province,from the financial situation it faces,the soft budget constraint of the government,the provincial government and the central government.The game and the promotion of officials motivated several angles to explore the reasons for the emergence of local government debt.Next,this paper uses an improved KMV model to estimate the local debt risk of S province through the time series data of S province from 1986 to 2017,and finds that the local government debt risk is still controllable.The hidden debt risk problem is very serious.Finally,based on the analysis and measurement of local government debt risk in S province,this paper proposes the following risk prevention and control measures: Establishing a lifelong accountability mechanism for local officials;Hardening budget constraints and strictly controlling the source of risks;Promoting investment and financing platforms Diversified transformation;Establish local debt risk assessment and early warning mechanism;Monitor and resolve local government implicit debt risk;Establish a long-term mechanism for debt risk management and control.