A Study On Establishment Of Deposit Insurance Institution In China

China is now in an important historical period during which an old financial system is shifting to a new one and the two are hitting each other. New financial institutions and business lines are constantly emerging, whereas the old financial system has not been broken up completely, nor has a brand-new financial system taken shape. A weak financial sector together with the rapid liberalization of the financial market will create instability. All the principal parts of the financial sector in China are now facing enormous risks. It is inevitable that some of them will be defeated and go bankrupt in the heated market competition. If adverse conditions prevail, the risk will probably turn into real financial crises. The losses on the part of depositors would evolve into serious social problems. After analyzing the present conditions and problems of financial system of China, the author puts forward the necessity and feasibility for the application of deposit insurance institution in China. The thesis proposes that we should establish the deposit insurance institution to ensure the stability of the whole financial system so that depositors, especially the medium-sized and smaller ones, would sustain no or little losses. Finally, the thesis tries to design the framework of deposit insurance institution.