Debt Risk Evaluation of Toll Freeways in Mainland China Using the Grey Approach

Xinhua Mao, Jiahua Gan and Xilong Zhao
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Xinhua Mao: School of Economics and Management, Chang’an University, Xi’an 710064, China
Jiahua Gan: Transport Planning and Research Institute, Ministry of Transport, Beijing 100028, China
Xilong Zhao: China Merchants Expressway Network & Technology Holdings Co., Ltd., Beijing 100022, China

Sustainability, 2019, vol. 11, issue 5, 1-17

Abstract: With a proactive loan policy to raise construction funds, a large number of toll freeways have been built in Mainland China in the past three decades. However, it brought about a long-term heavy debt burden for most provincial governments. To ensure financial sustainability of toll freeways, an accurate and appropriate debt risk evaluation has become necessary. This research aims to explore debt risk factors and calculate the overall debt risk levels of toll freeways using the grey approach. Debt risk factors were identified as belonging to five categories—debt scale, debt structure, debt management, external environment, and solvency—and three new debt risk factors were added for specific concern of toll freeways—toll revenue, free cash flow, and earnings before interest, tax, depreciation, and amortization (EBITDA) margin. Debt risk levels of toll freeways in 29 provinces in Mainland China were evaluated by the proposed method and classified into three groups–low debt risk, medium debt risk, and high debt risk according to grey possibility degree ranges. Calculation results show that six provinces have low debt risk, 10 provinces have medium debt risk, and 13 provinces have high debt risk. Additionally, some specific policies to reduce toll freeway debt risk were provided based on the evaluation findings.

Keywords: toll freeways; debt risk evaluation; grey approach; grey possibility degree (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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