Analysis And Comparison Of Deposit Insurance System In Hong Kong And The Mainland

Nowadays, the global financial crisis that was triggered by the sub-prime crisis in 2007 is still affecting the financial market and real economy globally, which are still facing many uncertainties. However, the banking industry, which is the center of the terrible storm, didn't have the large-scale of runs, for a sound deposit insurance system playing a significant role in the stabilization. It proves that the financial stability and the financial safety net are extremely significant to the healthy and continuous development of the economy in an area or a country. The crisis also leads the uncertainty to the fast developing economy like China, and as a big country with a high saving rate, it is urgent to establish an effective deposit insurance system.In this paper, the research and studies on deposit insurance system domestic and abroad are firstly carded, then the background, the core content, the main features and the achievements of deposit insurance system in Hong Kong is studied. Through the comparison of institutional environment between the China mainland and Hong Kong, hints are found for the development of deposit insurance system in China mainland. In order to have an effective and soundness deposit insurance system, the China mainland should continue to optimize the institutional environment. After selecting an effective path and the main target, the framework of the system should coordinate the current financial security arrangements. And the design should consider the interests of different parties, and gain the equilibrium point. This paper design the elemental framework of deposit insurance mechanism of China, and have a suggestion of responsibility of the organization, member qualification, capital resource and other details, whose ultimate target is protecting the interest of investors', enhancing the confidence of society, maintaining the financial stability and boosting the efficiency of the financial safety net in China.According to the conclusions of this paper, it is suggested that China should adopt the progressive reformation as soon as possible, and announce the explicit insurance mechanism from an implicit status. Through the establishment of a relative perfective deposit insurance system and a market-based risk compensation mechanism to the deposit-taking institutions, the interests of small and medium size depositors would be well protected, the public confidence in the banking industry would be enhanced, and the safety of the entire financial system would be safeguarded effectively.