The Impact of Loan Service of Local Financing Platform on Bank Stock Valuation
Supervising Professor: Chen Long; Case Researcher: Gu Chongqing [ Language available : Chinese ]

Pessimists believe that since November 2008, banks have lent to local financing platforms, and some of these loans will turn into non-performing loans in the future. They feel that as the growth rate declines, banks will discover how weakened they are in terms of future profit. The space for profit is also subject to increasingly obvious restrictions.
Optimists believe that although loans have flowed to local financing platforms, they are generally invested in infrastructure. This may not be effective in the short term, but does benefit economic growth in the long run. The Chinese government has sufficient financial resources and assets can be repaid on behalf of local financing platforms, reducing risk. This report uses available data to analyze these two sides of the same coin.

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