The Study On China's Deposit Insurance System

Along with the development of economy and the reform of financial system, there has been the possibility of bankruptcy in China, which will endanger the safety of the banking system and the entire financial system. How to secure the safety and efficiency of financial sector has turned to be the big issue of our country. Deposit Insurance System (DIS) can help to maintain the public's confidence in banks, to avoid deposit squeezing and to reduce the chain bankruptcy, so it has been widely accepted among countries. Till now, there has been no DIS in China's schedule, while the theoretic study has proved to be far from systematic and sufficient. This dissertation has focused on the study of DISs. Based on the foreign countries' experience, it will analyze the necessity and the possibility of establishing a DIS in China, then it will continue to bring forward the framework of the future DIS according to the actuality of China.Chapter I puts forward the theoretic basis of a DIS. Though DISs have mainly aimed at maintaining the financial stability and protecting the small depositors' interest, there are three major problems within the DISs: moral hazard, adverse select and agent problems.Chapter II studies the DISs around the world and finds some common features. Then the chapter attentively analyzes the pros and cons of different designs for DISs' coverage, funding, premiums, management and so on. Chapter III briefly introduces some specific DISs' models, and compares the federal DIS in America with the voluntary DIS in Germany. Besides, the chapter also talks something about the current DISs in the developing countries.Chapter IV starts from the introduction of banking sector's actuality in China. Then it proves the possibility of setting up a DIS in China from different angles. In the end, the chapter demonstrates the necessity of a DIS in China and reaches the conclusion that it is the time for China to establish a DIS now. Chapter V gives the proposed framework for China's future DIS. First, the policy makers need to enact a "Deposit Insurance Law" as the legal basis. Then a Deposit Insurance Company which will be in charge of the function of the future DIS must be set up. Finally, referring to the foreign experience and China's actuality, the coming DIS should be designed as an insurance system with limited coverage, risk-based premiums, public and private join funding, compulsory membership and so on.