Evaluation Criteria for the Financial Viability of Urban Railway Construction Plans

Since the 1980's, the intensive construction of urban railways has greatly contributed to a reduction in traffic congestion levels of large cities. The financing of urban railways through excessive loans, however, has led local governments into serious debt, as well as urban railway operation deficit. The problem originated from a neglect to take into consideration the financial ability of local governments, prior to approving construction plans for the urban railways. The purpose of this study is to establish criteria for evaluating the urban railway project's financial viability. The regression model utilizes local governments' financial analysis indices as an independent variable, and their rate of self-financing for the urban railway projects as a dependent variable. It was shown that the evaluation model performs well in predicting the financial viability of the urban railway projects. The evaluation criteria for the financial viability of urban railway projects were drown from the model. The evaluation criteria were expressed in terms of the viable level of local governments' financial analysis indices.