Research On The Role Of Deposit Insurance Agency In The Bankruptcy Of Chinese Commercial Banks

With the integration of the world’s economy, marketization of the interest rate and the private capital pouring into the Chinese banking sector, poorly operated commercial banks will inevitably be forced to leave the market. Besides, the insolvency of banks not only immediately impacts the depositors, but may also have a significant impact on the stability of the nation’s financial system. Therefore, China has come up with the goal of establishing the bankruptcy legislation system for commercial banks in the coming years. By taking a close look at the legislation system and practices of the bank insolvency procedures in developed countries, the deposit insurance agencies often play an important role in the bank insolvency procedures. With its human resource advantage, information collecting advantage, industry resources advantage and the financial advantage, the deposit insurance agency helps a lot in lowering the cost and increasing the efficiency of bank insolvency. Therefore, how to form a complete and sound bank insolvency system, and how to design the role of deposit insurance agency in the bank insolvency procedures become the focuses of the banking law and bankruptcy law.This paper aims to research on the role of deposit insurance agency in commercial bank insolvency procedures in China, by analyzing the legislation framework of our country with reference to relevant experience of other developed countries. The paper is divided into the following four parts:Part Ⅰ introduces the definition of bank insolvency and point out that the bank insolvency system should include a serial of precaution measures; And analyses the major legislation frameworks of bank insolvency as well as the institutional framework for bank insolvency procedures.Part Ⅱ discusses the necessity and advantages for deposit insurance agency to play a significant role in the bank insolvency procedures by analyzing and comparing the functions of the court, central bank, banking regulatory commission and deposit insurance agency in bank insolvency procedures.Part Ⅲ explored the role of deposit insurance agency in the bank insolvency procedures in several developed countries:USA, UK and Japan. This three countries have established the bank insolvency legislation system quite early and all have strengthened the functions of deposit insurance agency after financial crisis. By taking a close look at their legislation system and practices of bank insolvency, we are enabled to figure out the role of Chinese deposit insurance agency.Part IV starts from the analysis of legislation framework and institutional framework of bank insolvency in China. And by analyzing the influence of the Deposit Insurance Regulations released a year ago to the present legislation system for bank insolvency, this part tries to figure out the role the deposit insurance agency should play in the bank insolvency procedures in our country.