Author(s)

Jie Zhang ^1,2

Affiliation(s)

¹ Jining Normal University, Wulanchabu, Inner Mongolia, China
² Center for International Education, Philippines Christian University, Manila, Philippines

Corresponding Author

Jie Zhang

ABSTRACT

With the acceleration of China's urbanization process, the deep opening of the capital market and the acceleration of the pace of industrial structure adjustment and upgrading, how to solve the problem of capital source in the process of urban construction has become an important issue that needs to be solved and deserves attention. This paper introduces the relevant theoretical knowledge of municipal bonds, including the concept, classification, characteristics and functions of municipal bonds. The paper focuses on the analysis of the credit risk faced by municipal bonds, and introduces the KMV model to establish a credit risk model. This model evaluates the level of credit risk by considering the relationship between enterprise value and default probability, establishes the credit risk model of municipal bonds by using the KMV model, and puts forward the method of calculating the theoretical default probability. On this basis, a reasonable bond issuance scale is proposed.

KEYWORDS

Municipal Bond, Credit Risk, Issuance Scale, KMV Model

CITE THIS PAPER

Jie Zhang, Municipal Bonds: A New Financing Channel for Local Governments under the Tax Distribution System. Social Security and Administration Management (2024) Vol. 5: 8-16. DOI: http://dx.doi.org/10.23977/socsam.2024.050102.

REFERENCES

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[11] Junbo Wang, Chunchi Wu, Fu Zhang. Liquidity, Default, Taxes and Yields on Municipal Bonds. Finance and Economics Discussion Series, 2005.
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