Analysis Of Deposit Insurance Effect On Banking Stability

Financial issue is the core problem of the modern economy,while the financial industry is the heart of the national economy,the security of the financial system maintains the safety of the national economy.Especially in the intensified trend of economic globalization today,how to ensure the financial industry runs efficiently and smoothly has become the world issues of common concern.However,the banking is the main financial agency in the financial market,the instability in the banking sector will certainly leads to a crisis of the whole financial sector.Because of the particularity of banks' debt managements,it leads to many of the banks' own instability factors,it's easy for a bank to arise liquidity problems,causing crisis of depositors' trust in bank,and then leads to a run on deposits,coupled with the chain reaction in the banking sector,it's easy to spread the individual bank's running problem to a huge crisis of the whole banking sector or even the whole financial system,thereby undermining the stability and healthy development of the economic society.Deposit insurance system is an important system arrangement which can guarantee the security and stability of the financial institutions such as the banking sector,it has an irreplaceably positive significance in protecting the interests of depositors and maintaining financial order,and has become an important part of a country's financial safety net.Of course,the deposit insurance system also has some potential problems and hidden dangers in the design and implementation process unavoidably,how to understand the connotation of the system correctly and how to explore the road to make the system design more perfect actively,is an important issue of the development of the deposit insurance system nowadays.This thesis is divided into six parts:Part ?: Introduction.It presents the background and significance,domestic and foreign literature review,the content and methods,the innovations and deficiencies in the study.Part ?: Basic idea and organizational forms of deposit insurance system.It includes the concept,content,classification,basic idea and organization,to enhance the understanding of the system.Part ?: Banking instability and deposit insurance needs.It analyzes banking instability like the liquidity crisis,asymmetric information,bank runs and spreading risks,leading banking needs for deposit insurance system.Part ?: Double effect of deposit insurance system on banking stability.It presents the positive effects like preventing the banking runs,monitoring the banking stability,ensuring the orderly exit,and the negative effects like increasing costs,causing deposits moving,moral risks and adverse selections,to provide a theory reference for the follow-up research and improvement of the system.Part ?: Analysis on the effect mechanism of the deposit insurance system based on Game Theory.It introduces the thought of Game Theory and focuses on the way the deposit insurance system prevent the banking run and cause moral risk,making a better understanding of the deposit insurance system's effects described above.Part ?: Conclusions and Implications.It summaries the full text,presents the research findings,and proposes the revelation: the establishment of the deposit insurance system is a global trend,but it isn't a universal tool,meeting practical needs is the best design.