The Oretical Analysis And Pricing On Deposit Insurance System

In the economic liberalization and financial globalization background, preventing financial risks and maintaining financial stability are common goals around the world. Deposit insurance system was established in1934, helping the U.S. banking industry survive the1930s crisis. Now the deposit insurance system makes remarkable achievements in financial supervision and risk management. Since the1980s, the world has undergone a series of currency and banking crisis, which prompted more and more regions to establish deposit insurance systems. Up to January31,2014, there are113countries and regions which have their own deposit insurance systems.Deposit insurance system is the product of the financial system. As one of the three pillars of the financial security, deposit insurance system has many advantages. But as non-profit public goods, adverse selection and moral hazard are the deposit insurance system’s most serious defects.China’s financial market evolved from a planned economy, showing some unique features. At present, China is still implementing the implicit deposit insurance system, implicit deposit insurance system has its irresistible drawbacks. Thus, it is necessary to establish explicit deposit insurance system. This paper is divided into eight chapters.Chapter Ⅰ, introduction. This part focuses on the research background, the relevant literature, theoretical methods and the framework, In conclusion, the study on how to establish a suitable deposit insurance system is very necessary in China.Chapter Ⅱ, the deposit insurance system theory. First of all, it introduces the history of the deposit insurance system. Secondly, the article analyzes the deposit insurance system’s advantages and disadvantages. A suitable deposit insurance system play an important role in the stability of the financial system.Chapter Ⅲ,the practical deposit insurance system experience from foreign countries and regions. The paper introduces deposit insurance system experiences in the United States, Canada, Japan, Germany and Taiwan, mainly from the organizational form, functions, insurance coverage and premium rates four aspects. In conclusion, it is important to take measures to control the deposit insurance system’s adverse selection and moral hazard drawbacks.Chapter Ⅳ, classic pricing model of the deposit insurance system. This part introduces the option pricing model and the expected loss pricing model in detail. Every model has its own advantages and limitations, so pricing cannot simply rely on only one model, but need to consider various factors.Chapter Ⅴ, empirical analysis and the comparison of deposit insurance pricing models. This chapter takes five state-owned commercial banks and three joint-stock commercial banks as sample and uses Merton method and credit ratings to price respectively.Chapter Ⅵ, pricing ideas and the framework of the deposit insurance system. The article put forwards pricing model, and then designs the framework of the deposit insurance system from institutional settings, the functions, financing source and mode, operation, the insurance fund and the payment five aspects.Chapter Ⅶ, the relevant policy recommendations. This chapter proposes some recommendations from legislation, the financial system, risk management and social philosophy four aspects to standardize the operating environment of the deposit insurance system.Chapter Ⅷ, the conclusion.The innovations of this thesis are as follows.(1) The use of Merton model and credit rating to measure the rate, and the comparison. Both models all have their own advantages and disadvantages, so we need to make comparison and take all factors into consideration.(2) Take China’s special circumstances into consideration, then designs the framework of the deposit insurance system.