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Governments worldwide are keen to encourage PPP schemes, however PPP is not a foolproof business. Many local governments and private investors have suffered severe or trying experiences. In this research, 10 case studies were conducted to identify the obstacles and difficulties for successful implementation of PPP projects from the perspective of government guarantees. These PPP projects include two water supply plants, two sewage treatment plants, two power supply plants, two highway projects, and two bridge projects. The findings obtained indicate that the local governments are familiar with "the type of guarantees" to provide to the private investor but they are unsure of the "amount" that should be given. Many PPP projects have therefore been heavily criticized for over benefiting the private investors as the government provides them with too many guarantees. The inappropriate guarantees offered by the government are regarded as one of the root causes of PPP projects' failure. The lessons learned are valuable for determining appropriate government guarantees for future PPP projects and broadening the opportunities for infrastructure development with PPP procurement model.

Government guarantees are increasingly important as a policy instrument in public infrastructure investment and to assist the banking and financial sectors following the global financial crisis. This paper analyses how different modes of accounting characterize such guarantees in the contexts of public sector financial reporting, statistical accounting, budgeting and long-term fiscal projections. Guarantees are difficult to specify for accounting treatment and consistent conceptualization of liabilities. These difficulties make it attractive for governments to treat obligations as off-budget and off-balance sheet contingent liabilities, rather than recognize them in financial statements and statistical accounts. Miller and Power's territorializing, mediating, adjudicating and subjectivizing roles of accounting are utilized to analyse the reporting of UK government guarantees. Provisioning for guarantees is complex in financial reporting statements and often absent in national accounts, a deficiency which Eurostat has attempted to address by devising the concept of standardized guarantees and by securing more disclosure of contingent liabilities. There is potential for future research especially where there is greater mediation between the four modes of government accounting.

We examine the pricing of financial crash insurance during the 2007–2009 financial crisis in US option markets, and we show that a large amount of aggregate tail risk is missing from the cost of financial sector crash insurance during the crisis. The difference in costs between out-of-the-money put options for individual banks and puts on the financial sector index increases four-fold from its precrisis 2003–2007 level. We provide evidence that a collective government guarantee for the financial sector lowers index put prices far more than those of individual banks and explains the increase in the basket-index put spread. (JEL E44, G01, G13, G21, G28, H81)

Purpose: This paper aims to examine debt accumulation between enterprises and debt repayment of local government which is linked with local government guarantee that acts as a debt transferring mechanism. The purpose is to illustrate that it is essential to pursue a sustainable fiscal policy of local governments so that decrease debt dependence during the processes of promoting economic growth.Design/methodology/approach: The channel of how the partial debts of non-financial enterprise to be transferred into the debt repayment of local governments is explicated by the theory of soft budget constraint and the mechanism of debt transferring - local government guarantee. The feasible generalized least squares regression model is used to test the hypotheses. The sample data include debts of non-financial industries, bad loans of commercial banks and debt repayment of local governments in nineteen provinces that are published from the official database of national Ministries over the period from 2007 to 2016.Findings: The results demonstrated that there is a positive relationship between enterprise debts and the debt repayment of local governments. In addition, there is symbiotic phenomenon between corporate debts and debt repayment of local government, that is, the current patterns of industrial investment and financing of local governments may cause production overcapacity and enterprise debt accumulation on the one hand, and shift enterprise debt and bad loans to the debt repayment of local governments through the debt transferring mechanism on the other.Originality/value: This research verifies the positive relationship between enterprise's bad loans of bank and the debt repayment of local governments through introducing debt risk transferring mechanism, and thus provides empirical evidence for central government to prohibit the debt guaranteed of local governments and to enforce hard budget constraints.

Banks are growing ever larger compared to their national economies. We show that increases in relative bank size (measured as a bank's liabilities divided by national GDP) are linked to banks displaying higher tail risk. This effect is not entirely due to risk channels that disproportionately expose relatively large banks to systematic tail risks, sovereign risks, or banking crises. Instead, we detect a persistent component in the tail risk of relatively large banks that is bank-specific and connected to government guarantees. Furthermore, as banks grow in relative size, tail risks are shifted to debtholders without wealth gains for shareholders.