Research On Cause Of Formation And Prevention Mechanism Of Moral Hazard In Deposit Insurance System

Till now, more than 110 countries and regions have implemented deposit insurance system. The necessity and importance of establishing deposit insurance system has been widely recognized. In the exploration in theory and practice, moral risk has been paid attention extensively as the main disadvantage of the current deposit insurance system. Moral risk arises because the protection provided by deposit insurance system to the depositors lowers the risk awareness of depositors and deposit-taking financial institutions, encourages deposit-taking financial institutions to be engaged in high risk activities and as a result, harms the interests of depositors, deposit insurance fund and financial system.After tortuous longer than 20 years, the deposit insurance system in China finally is established finally. At March 31,2015, The State Council officially announced "deposit insurance regulations" of China. The establishment of deposit insurance is beneficial to improve the public trust of the banks and other financial institutions, maintain the economic interests of depositors, reduce the risk of the banking industry, and ensure the stability of the financial system. On the other hand, it will also increase the degree of information asymmetry, and then produce adverse selection and moral hazard. Especially when a large number of moral hazard problems occur, it will reduce the security of the deposit, damage to the interests of depositors and banks, and increase the instability of the financial market. China’s current deposit insurance system is not perfect. It is very simple and even blank in a lot of important aspects (such as the status and supervision authority of deposit insurance institutions, specific operational programs of rate of risk difference, processing procedures of banks in problem, etc.).On this background, there is great theoretical significance and practical significance to research the cause of formation and prevention mechanism of moral risk in deposit insurance system.The dissertation conducts research on the cause of formation and prevention mechanism of moral risk in deposit insurance system. The dissertation is composed of four parts:Part one is the formation mechanism of moral hazard under deposit insurance system. By establishing the cost and income model of relevant behavior person of deposit insurance (depositors, banks, financial regulators), it makes a marginal analysis on the actions of relevant behavior person in the deposit insurance system. Accordingly, it makes general theoretical explanation on the causes of moral hazard under deposit insurance system and puts forward to a research angle to prevent the moral hazard from the change of related behavior of deposit insurance system in one marginal cost perspective.Part two is a comparative study on moral risk in different deposit insurance modes in order to provide theoretical support for the research of prevention mechanism of moral risk under deposit insurance system. The research shows that because of the defect of the system design, implicit, voluntary, single rate and "pay-box" system of deposit insurance have more prominent problems of moral hazard and are not conducive to the deposit insurance system and the interests of depositors. The regulation cost of explicit, voluntary, differential rates and non-pay-box mode of deposit insurance is relatively lower. Those patterns reduce the moral hazard of deposit insurance, which are Conducive to the maintenance of financial stability and promote the fair competition of the bank systemPart three is the international experience and enlightenment of moral risk prevention under deposit insurance system. This part makes a comparison of deposit insurance pattern in different countries and regions, to summarize the experience of the international prevention of moral hazard of deposit insurance, so as to provide practical reference for moral risk prevention mechanism of the deposit insurance system in China.Part four is research on moral risk prevention mechanism of the deposit insurance system in China.This part is the realistic significance of this research. The main contents include:the basic system of moral risk prevention in deposit insurance (including position and regulatory authority of the deposit insurance institution, the compensation limits of the deposit insurance, processing procedures of banks in problem, etc.); research and empirical test for pricing model of risk-adjusted rates; optimization of deposit insurance environment based on moral hazard prevention etc.The emphasis of this part is the research and empirical test for pricing model of risk-adjusted rates. Numerous studies have shown that risk premium pricing is the most effective way and the key measure to solve the problem of moral hazard in deposit insurance. At present, option pricing model and the loss-expected pricing model have been widely recognized as risk pricing methods of deposit insurance in theory. The CAMELS pricing method of America is the most mature risk pricing of deposit insurance in practice. With reference to the CAMELS pricing method of American, at the same time according to the actual characteristics of China banking, this paper constructs the suited risk pricing model for China. Through using this model to calculate the risk rates of listed banks in China, and then comparing the calculated risk rates with the risk premiums calculated by option pricing model and loss-expected pricing model, it is demonstrated that the risk pricing model proposed in this paper has high applicability and accuracy.Whether a country’s deposit insurance system can successfully run, largely depends on whether the system design and implementation can effectively prevent the moral risk. As the first country establishing the deposit insurance system, USA is still reforming and perfecting the moral risk prevention mechanism of the deposit insurance system. Based on the theoretical analysis and practical experience, as well as combination with the reality of china, the research of this paper on causes and prevention mechanism of the moral hazard under deposit insurance system has strong theory significance and practical significance.