Law as part of compulsory education on universities

Pei Zhang ()
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Pei Zhang: Economics and Management School, Wuhan University, Wuhan, China

HOLISTICA Journal of Business and Public Administration, 2015, vol. 6, issue 2, 9-19

Abstract: Euro Crises triggered highly attention around the world. Many national governments strictly reduce risks about government debt. As an implicit debt of government, the debt of Local government financing platform rose rapidly in order to cope with financial crises. In this context, this paper studies the problem of a Chinese local government financing platform by using modified KMV model. By calculating risks and safety margin scales of outstanding debt, this paper puts forward an approach to measure debt risks of platform enterprises. It finds that when the leverage ratio of financing Platform Company in Guangxi province is under 20%, the probability of default is very small. When the leverage ratio is above, probability of default increases rapidly. When the leverage ratio is about 35%, probability of default approaches to 1. At last, solutions are provided to manage risk including financial innovations, cooperation and information disclosure.

Keywords: government finance; government guarantee; financing platform; debt risk; KMV model (search for similar items in EconPapers)
JEL-codes: G28 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:urn:urnste:v:6:y:2015:i:2:p:9-19

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