Internationale Zeitschrift für Wirtschafts- und Managementwissenschaften

The Audit Research of Local Government Debt Replacement

Abstract

Sheng Ge, Hua Liu and Xuejie Ha

The successful implementation of local government debt replacement is of great significance and the solution to the problem of local government debt in China. However, local government debt replacement poses characteristics of fiscal risks financially. These risks will not only affect the implementation effect of local debt replacement, but will further influence the security and stability of our financial system. In this paper, based on the risk of local government debt replacement, evolutionary game theory is used as the analysis tool together with an evolutionary game model to build the local government debt management audit. The paper analyzes the evolution stability of the main strategies of both the local government and the commercial banks. Through a "scene-response" concept derived from the computational experiment method, the computational experiment method is used to simulate the initial probability of different strategies as a result of the evolutionary game model. It is found that improving the auditing mechanism and improving the effects of risk management can greatly shorten the time for government departments and commercial banks to change to the positive strategy of debt replacement. Finally, this paper puts forward the audit governance policy combination of debt exchange risk from three aspects: supervision responsibility, evaluation efficiency and information transparency.