Research On Differential Pricing Of Deposit Insurance In Chinese Commercial Banks

Deposit insurance system,as the internal checks and balances and supervision mechanism for commercial banks to prevent internal risks,together with preventive risk management and emergency rescue system,constitutes the three lines of defense for internal control of banks.At the same time,in order to effectively prevent and resolve financial risks and maintain the smooth operation of the financial system,the deposit insurance system,the principle of prudential supervision and the central bank’s lender of last resort system constitute the three pillars of the financial safety net.With the development of China,the importance of the deposit insurance system is increasing day by day.The time series data of financial asset returns has its own characteristics.The use of GARCH and EGARCH models can reflect some of the information that cannot be reflected in the historical volatility data,making the calculation of deposit insurance rates more accurate and making the pricing model more realistic and applicable.Due to the limitations of the option pricing model,most of the current research focuses on listed banks.With the deepening of the reform of the market economy system and the development of the financial market,the number of financial institutions is increasing and non-listed banks have become an important part of the financial system,which will also have a significant impact on the stability of the financial system,so it is necessary to study the pricing of non-listed banks’ rates.In this paper,the classical RV model is used to calculate rates for listed banks,and the GARCH model and EGARCH model are used to improve the estimation results and then extended to non-listed banks.In addition,this paper presents regression analysis based on the results of deposit insurance rate measurement for listed banks,and extends it to non-listed banks and proposes two methods of rate measurement for non-listed banks to simplify the calculation process while improving the accuracy of the estimation results.The deposit insurance premium can be regarded as one of the operating costs of banks.An excessively high rate may lead to extreme behaviour of banks,prompting them to withdraw from insurance or to be forced to operate high-risk businesses in order to cover the high costs;an excessively low rate will result in the deposit insurance fund not being able to meet the operating risk requirements,and in the event of a bank operating crisis,the deposit insurance fund cannot be effectively used for risk management,which defeats the purpose of the system.This would defeat the purpose of the system.This paper improves the accuracy of the calculation by using the market comparison method and the RV model to specifically study the pricing of unlisted banks in China,and improves the efficiency of the calculation by building a relationship between the rate and financial indicators.The pricing approach adopted in this paper helps to mitigate the negative effects of the system compared to the previous crude calculation approach.