Research On Construction Of Deposit Insurance System In China

As a part of Financial Security Net, Deposit Insurance System (DIS) has unique functions in maintaining the financial stability and protecting the depositors'interests. Nowadays, DIS has been adopted to defense the contagion of banking risk and decrease the financial crisis in many countries. With the further development of our financial system reform, China has essential to build uniform Deposit Insurance System. At the same time, it is very important to research on Deposit Insurance System. So this article chooses DIS to research on and analyses some key points of DIS theoretically and practically, and then put forward its blueprint of DIS of China. With the above research, the author wants to make efforts to introduce DIS into China soon.Owing to the above causes,the writer decides to take deposit insurance system as the researching target,through comparing the overseas experience,brings forward the necessity,feasibility and frame composition of deposit insurance system in China,and analyzes how to gradually carry out the system in China. This essay can divide into five parts. Chapter one introduces the background of the deposit insurance system and the researching methods. Chapter two explains the theoretical foundation of the deposit insurance system, including concept, nature, essential features and functions of deposit insurance system. Chapter three compares different country deposit insurance system from the respects of organizing form and specific contents, and summarizes the common experiences. Chapter four focuses on the correct methods of understanding and evaluating the moral hazard problem. The article believes that the proper design of DIS does help to controls the moral hazard, but there are still other ways to reduce it. The last section focuses on the practical status of Chinese financial institutions. With studying the problem existing in the development of banking industry and the shortcomings of implicit deposit insurance system, the thesis makes a general design of DIS for China.The paper adopts several researching methods , including comparing , analogy, demonstration and citation,etc. From the angle of the impact of explicit deposit insurance on the behavior of bank, we build a model that maximizes the equity of stockholder under the constraints of market and cost. Using this model, we analysis the differences of banks under implicit deposit insurance and explicit deposit insurance. We conclude that the supervision level of bank increases and the incentive of moral hazard of bank decreases with the institutional transition. Therefore, it is necessary to establish explicit deposit insurance in order to decrease moral hazard.