Debt Scale,Asset Value and Debt Risk of Local Government

Using the Contingent Claims Approach( CCA),this paper measures debt risk of 31 Chineselocal provincial governments in 2013,presents several scenarios where the local governments' asset value and debt scale change,analyzes and assesses relevant movements of the risk indicators. The results suggest that the debt risk of China's local provincial governments is still in control. It positively associates with the debt scale of local government and negatively associates with the asset value of local government,and becomes worse or even defaults when debt scale increases or asset value reduces. So the most important job for the local government debt management is to treat the existing debt,control the increasing debt,evaluate the assets that the debt formed,and improve the debt paying ability.