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Government or the risk of liabilities Exploration

Author: JiaLanLan BaoSong From: www.yourpaper.net Posted: 2007-11-19 23:42:00 Read:
Since 1998, the Chinese government has implemented a proactive fiscal policy, the use of bond financing for infrastructure construction, and to expand domestic demand and stimulate economic growth is indisputable. In 2001, China should continue to implement a proactive fiscal policy, including: First, continue to issue treasury bonds for construction of infrastructure; issue special treasury bonds to support the large-scale development of the western region; Third, it is appropriate to improve the people's income, stimulate consumption and expand domestic demand. Therefore, it is appropriate to expand the government debt is still one of the rational choice for China's current macro-control policies, stimulating private investment and consumption and promote economic development at the same time, the expansion of the national debt scale will undoubtedly increase the government's financial risk. Domestic theorists widespread concern at this point, and has established a national debt risks qualitative and quantitative analysis of the mechanism. I believe that our financial risk is different from the risk of a general economic entity, the Financial ultimate bearers of the socio-economic risks, and risks of banks and state-owned enterprises risks ultimately are likely to translate into financial risks. Therefore, the risk of government debt includes not only bonds debt risk, this directly by credit constraints, risk profiling, from a broader perspective, it should also include contingent debt risks brought about by moral constraints. For example: the uncertainty brought about by the debt risk of the risk of "quasi-government bonds, local government and social security fund gap risk, banks and state-owned enterprises operating risks such as the guarantee provided by the government, overtly or covertly risk of debt (or debt risk). Of course, in a market economy environment, it is impossible to prevent all of the financial risk, but the generation mechanism of financial risk to a correct understanding of the risk factors, and on this basis to develop appropriate measures.

This article only or liabilities angle Exploration of our current financial risks.

Government or liabilities risk qualitative analysis

The provisions of Article 19 of the Accounting Act implemented from July 1, 2000, "units to provide guarantees, pending litigation or matters shall be in accordance with the provisions of the national unified accounting system, financial accounting reports be Help. "or issues guidelines or liabilities are defined as the potential obligations of past transactions or events, its existence must by uncertain future events occur or do not occur to be confirmed;, or past transactions or events current obligations performance of the obligation is not likely to lead to the outflow of economic benefits or the obligation amount can not be reliably measured. "Accordingly, we can easily find as a rational decision-makers to consider not only the reality determined by economic factors, but also concerned about the deal with uncertainties. Under the conditions of market economy, rational government policy makers. To fully reflect the financial risk in the decision-making, it is necessary to introduce "or" 'and "hidden" government debt new concept, in order to measure and to avoid the risk of uncertainty.

The formation mechanism of the debt with the general uncertainty creditor-debtor relationship can be said is a potential obligations from past transactions or events, it is to a large extent based on Government Ethics generated based, so here we are from The basic characteristics - "or" moral restraint "to investigate the government or the nature of the debt risk:

1. First, it should be clear "or" content, which itself contains a random mean government face; Pro some randomly occurring Incident, will make the appropriate expenditure corresponding responsibility assumed probability of such duties liabilities scale depends on the the exogenous conditions with endogenous conditions. So-called exogenous conditions such eventualities such as natural disasters and the banking crisis; called endogenous conditions is the ultimate responsibility of the government prior commitment to certain items, such as: the government stepped guarantee (protective prices for agricultural products acquired) or certain insurance investment projects, in the event of losses or bankruptcy, the Government will have to take the money to pay; If the performance of government supervision and regulation if a problem occurs, resulting in financial order and the chaos of the market order, then the central government will be in the financial faced with the pressure of prior unforeseen expenditures.

2. Secondly, it should be clear "moral restraint" with respect to the credit constraints, we believe that the substance of the national debt is the government fiscal revenues achieved through debt of relations or credit means, here with credit debt, there will be a corresponding credit and debt the relationship generated, must be accompanied by the credit risk. Due to the long-term implementation of the unified revenue and expenditure of the financial system in the country, the local government has no power to issue debt, the central government as a moral obligation to adhere to social justice and equity. Or debt, the central government had to bear the moral responsibility. When various financial investment risk, the central authorities must come forward to rescue, in the form of moral hazard in the market: the central government for the party (the principal), the other to the fragile banking system, inefficient state-owned enterprises, local governments ( agents), the formation of an agency relationship, the Government can not bank, state-owned enterprises and local governments to implement a binding contractual relationship, the end of the day, once the risk, all agents will risk is transferred to the central government, which will be much far beyond the scope of control of the central government budget.

Government liabilities Causes of

Investment system, business system, the reform of the financial system, deepening market transformation of socialist reform, government finances, especially the central government finances facing growing debt risks and uncertainties pressure, and the Government in the development of financial Failure to pay attention to this trend changes when, then the risk will undoubtedly increase.

1. "Quasi-government bonds risk: the so-called" quasi-government bonds "refers to a financial guarantee bonds issued by various government departments and industry department in bonds, government and bank bonds. This part of the debt is also recognized by the law and the contract requires full and timely repayment. Is Treasuries different quasi-government bonds issued in charge of the industry sector and policy banks have in addition to the sources of income other than the financial allocation, so fiscal repay their borrowing requirements only partially bear the credit risk, the central government in this part of the debt and moral risks.

2. Own law local governments can not issue bonds, local government debt risk: local government debt is the debt of local government through local trust and investment institutions in the domestic and foreign borrowings of state-owned enterprises and local financial guarantee. Currently, this part of the debt can be said is a "black box", who can not tell its size. This part of the bonds formed by the guarantee, that some do not have to be repaid. The bearers of this part of the debt should be the first the debt investment institutions and state-owned enterprises, and only then the local government. Only in the case of local government finances difficult to repay, the central government may give the necessary support. However, under these conditions, but also may lead to new moral hazard, and that the local governments (as well as the following will be mentioned enterprise and development banks) know anyway, the central government will act as the final payment will relax their efforts, which greatly increase in the probability of the risk issue.

3. Social security fund gap risk (mainly social security pension risk); For a long time, China's social security system is a wide employment, low wages, multi-subsidy policy, social security funds needed all swept by the State and enterprises, individuals do not bear costs and implement PAYG system, there is no accumulation. In the the aging peak approaching the new situation and the gradual establishment of the socialist market economic system, now received pay social security system must be reformed. At present, China has established a combination of social pooling and individual accounts part of the accumulation mode, but in most parts of the personal account is "empty account" to run, and is still the PAYG system. In order to compensate for historical debts, support the reform of state-owned enterprises, and to maintain social stability, and gap funding for social security, fiscal certainly to come up with funds to make up. For this part of the debt, the Financial should not be the full burden, but because of the great uncertainty in the timing and amount of restitution, the potential risk is great.

4. Banks operating risks, and state-owned financial risk: banks operating risks, and state-owned financial risk are likely through the transformation of two ways for financial risks: First, due to the low economic efficiency of state-owned enterprises and banks, will constrain the growth of fiscal revenue. Second, banks and state-owned enterprises is the lifeline of the national economy industry status, finances must be supported. Especially in the basic structure of China's state-owned economy is still "Trinity" exchage of this risk is even more marked. Government to banks in 1998, 270 billion government bonds issued to recapitalize banks; bonds issued financial guarantees to banks asset management company established in 1999, to buy banks' bad loans at par, and then specify a state-owned enterprise is exempt debt through debt-equity swap to the State Economic and Trade Commission. But under the conditions of market economy, of course, should be the main banking business risk and most state-owned financial risk control their own country from the overall interests of the national economy to support, but not to say that the risk of banks and state-owned enterprises must be borne by the Financial This part of the debt finances are concerned, and should not be borne by the Financial.
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