Deposit Insurance System And The Model Of It's Premium

Customers deposit there money into bank. However, who continues to protect there customers' interests when banks go bankruptcy because some reasons. It is under the target to protect customers' interests that the deposit insurance system has founded.Deposit insurance system has been adopted for more then seventy years . It has both advantages and disadvantages. A poorly designed deposit insurance system encourages moral hazard , adverse selection and agency problem. All these pitfalls originates from absence of fair insurance premium.This paper first introduced the characters , origin and development of deposit insurance system and it's situation of other countries. Then talked about the models, such as the basic form, the form of Black- Scholes, two—stage pricing model. With the development of our country's market economy, there will be much competence, which result in operating risks. To keep the financial system sound, it is necessary to introduce a deposit insurance system. Thus, in the last chapter, this paper talked the necessary of the system of China and a series of probable problem.In view of the similarity of the Europe put option and deposit insurance system, we conclude the form of pricing when the fluctuation ratio is random. It will be more practial with the extention of hypothese.