Mechanism of Financial Risk Prevention in Local Universities

DOI

10.2991/emim-17.2017.146How to use a DOI?

Keywords

Universities; Financial Risks; Prevention; Mechanism

Abstract

Some practical measures were proposed to prevent financial risks in local universities on the basis of an analysis of their forms and possible causes in view of actual performance of these schools in the field. To meet the demands over high quality talents of social and economic development, 198 local universities were set up from 1999 to 2005 upon the approval by the Ministry of Education of China, resulting in subsequent prosperity of local higher education and local economic and social development. On the one hand, these universities were founded to serve local economic development, on the other hand, some of them are either out of the combination of several schools or upgraded from 2 or 3-year colleges to 4-year universities. Since the purpose of such a practice is to assist local economic growth, a majority of the expenses of these universities comes from local financial funds. However, it has to be admitted that financial investment from local government is only about 20% of total expenditure for routine operation, and the proportion is even lower, especially in some underdeveloped regions. Additionally, some of the universities based on the combination of several schools or upgraded from junior colleges may be challenged by more serious economic difficulties, e.g. a series of jobs like campus expansion, equipment procurement and high-level teachers introduction for improvement of teaching quality, etc. require more financial support, which as a result leads to more and more severe conflicts between investment and demands in local universities. To solve the problem, local universities tend to apply for bank loans to raise educational funds. Although bank loans can resolve capital problems in a short term, due principal plus interest in high amounts also brings forth huge pressure and financial risks to these universities. Besides, such risks will become even more serious owing to the defects in their administrative mechanism. Therefore, how to avoid financial risks successfully has become an important factor in the healthy sustainable development of local universities.

Copyright

© 2017, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Dahua Wang
PY  - 2017/04
DA  - 2017/04
TI  - Mechanism of Financial Risk Prevention in Local Universities
BT  - Proceedings of the 7th International Conference on Education, Management, Information and Mechanical Engineering (EMIM 2017)
PB  - Atlantis Press
SP  - 732
EP  - 734
SN  - 2352-538X
UR  - https://doi.org/10.2991/emim-17.2017.146
DO  - 10.2991/emim-17.2017.146
ID  - Wang2017/04
ER  -