| Modern Deposit Insurance System(DIS) was originated in 1930s in the United States, resulting from the world economy and finance crisis. It was the major part of the Finance Security Network, aiming at protecting the depositors, stabilizing the social credit, avoiding and solving the banking panic, and maintaining the whole financial security.Recently, with the deepening of China's economic and financial reform, more and more financial risks have been exposed. Moreover, China has committed itself to opening the whole banking market by 2007, which was promised when China entered WTO. With the day approaching, more and more foreign banks are swarming into China, greatly threatening China's own banks. In the process of competing with the foreign banks with good reputation, it is urgent to resolve the problems of building and sustaining the stated-owned banks' commercial reputation since the government's reputation is fading out from the state-owned banks.This paper is, from a perspective of state-owned banks' reputation, mainly concerned with the implement of the DIS in China. The first two parts expounds the basic theory of DIS and analyzes the positive and negative effects of DIS in the practice in other countries. In the third part, after analyzing the characteristics of the state-owned banks' reputation, the author discusses the embarrassment from the present implicit deposit insurance supported by the government and puts forward the suggestion that government-based reputation should be replaced by the bank's own reputation. Based on comparing the costs and benefits with the explicit and the implicit DIS, a conclusion is reached that explicit DIS should be established with the fading out of the government's reputation from the stated-owned banks. In the last part of this paper, a model about the impact on the bank reputation from the degree of DIS's guarantee is quoted to analyze major problems that should be noticed during the establishment of DIS in China. |
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