Research On Risk Assessment Of Local Government Debt In China Based On KMV Model

As the scale of local government debt increases year by year,the issue of debt risk has increasingly aroused public concern.Since 2017,China has required local governments at all levels to strengthen prevention of local government debt risks at the Central Economic Work Conference for two consecutive years.The reason is that since the implementation of the tax-sharing reform in 1994,local governments in China have always faced the serious problem of fiscal “non-payment”.The “four trillion” monetary policy proposed in 2008 has further increased the financial burden of local governments.As of2018,the scale of local government debt in China has exceeded 18 trillion yuan,an increase of 11.21% compared with 2017,and the risk of government debt scale is particularly prominent.In addition,due to the irregular management of local government debt in the early days,the local government still had large-scale hidden debts,which further magnified the risk level of local government debt.At this time,using an effective risk assessment model to measure the true level of local government debt risk can both evaluate the effectiveness of government debt management work and come up with realistic risk warning recommendations,which has strong practical significance.This article takes local government debt as the research object,and combines the methods of literature research,qualitative analysis,quantitative analysis,and case analysis to statistically analyze the development process,current status issues,and risk causes of local government debt in China.And select Shanghai as the case object to carry out an empirical assessment of the level of local government debt risk.The research ideas of this paper are as follows: first,the research questions are put forward through a summary analysis of the research background;secondly,the relevant theories and existing researches are sorted out and summarized to lay the theoretical foundation for the research;then,statistical data are used to local governments Debt development history and status analysis,comprehensive qualitative analysis of debt-related issues;then,use the KMV model and ARMA model to conduct empirical research on the level of local government debt risk;finally,combined with the research conclusions,put forward countermeasures and suggestions for local government debt management.The conclusions of the study indicate that China's local government debt has gone through five stages of development,namely the period of debt exploration,the period of steady development of debt scale,the first period of debt outbreak,the period of“blowout” growth of debt,and the period of “tightening” of debt.The status quo of local government debt mainly includes large debt and rapid growth;the inter-provincial gap in government debt is not only reflected in the scale of debt,but also in the debt burden ratio;the government has a single financing channel,and the source of debt funds mainly depends on banks and other financial institutions There are potential risks;debt servicing funds are highly dependent on land transfer proceeds.The reasons local government debt risks mainly include: the contradiction between the fiscal power and the power of local governments,the development of urbanization and active fiscal policies,the performance evaluation system and short-term profit-seeking ideas of local officials,and the imperfect construction of risk prevention systems.The empirical conclusions show that the debt risk levels of Shanghai's local governments and the 16 district governments in 2019,2020 and2021 are generally low,but with the increase in the size of debts due,there is also the possibility of debt default.Based on this,it is predicted that the maximum debt maturity of Shanghai in the next three years will be 200 billion yuan,210 billion yuan,and 200 billion yuan.Based on the above research conclusions,it is suggested that the central government should reasonably control the size of the due debts of local governments;pay attention to local risks in a timely manner,and strengthen the prevention of government debt risks in the western region;further improve the construction of the fiscal system and the tax system;Standardize channel management;accelerate the establishment of a debt risk early warning system.