Empirical Research for Diversified Financing Risk of Urban Infrastructures Investment Company

Abstract:

Based on a proposal and an analysis of the causation mechanism and the patterns of structural risk, a risk assessment system was established for diversified financing of urban infrastructure investment companies based on the entropy and ideal point methods. Empirical analysis from both the horizontal and vertical directions was conducted based on the panel data of 10 listed companies. The results indicate that though the company financing risk varies significantly in different regions, it is highly correlated to the regional characteristics; national supportive policies have significant positive impacts on the development of companies. However, the impacts of the restrictive policies are insignificant because of the different policies and attitudes of the central government and the local government. On the whole, the diversified financing risks of urban infrastructure investment companies in China follow an upward trend.

Key words:urban infrastructures investment company; diversified finance; risk; entropy method; ideal point method