A Study On The Function Of The Deposit Insurance System In Banking Crisis Salvation

As a special enterprise which obtaining payoffs by managing debts, the commercialbank has always been with risks ever since it's naissance. Owing to its central and crucialstatus in the economic system of a country, the commercial bank endures diversiformrisks. Thereinto, among a good many of risks that the commercial bank is envisaging,risks of liability possess a vital station. One of the direct aftereffects of the accumulatingof banking risks is the breakout of the banking crisis. If effective measures cannot bemade at the time when individual bank is in crisis, not only will losses be caused to thedepositors and other creditors, but also because of the high contagion of the bankingcrisis, the individual banking crisis will be translated into a structural crisis, which mayimpact the security and stability of the financial system, and may even endanger thedevelopment of the economy as a whole. Therefore, banking supervisors of all countriesregard the most important the precaution and elimination of the banking crisis. As eventhough the most effective supervising system cannot absolutely eliminate the possibilityof the bogging down of the commercial banks. However, consummate legal salvationsystem can enhance both ability and efficiency of the commercial banks' entreating thecrises, and can reduce the impact on the society and the economic system to a minimumas well. Therefore, as an effective safeguard system to deal with the banking crisis,banking crisis salvation legal system has been becoming a more and more important partof the financial security legal system of many countries. Among these systems, depositinsurance system, as one of the three modern banking crisis salvation legal systems, hasplayed a more and more important role in the financial safeguard system of manycountries. The purpose of establishing deposit insurance system is to prevent banks from beingsqueezed and going bankrupt with preserving depositors' interests and maintaining thefinancial stability as its utmost goal. It is functioned by a deposit insurance institution,which collects the premium from the commercial banks, supervises the commercial â…¡Abstractbanks, rescues the banks when they have payment difficulties, and repays the depositorspartial or total sum of their deposits after the commercial bank has been declaredbankrupted. Presently, the researches of the deposit insurance system are mostly limitedto the aspect of the protection to the depositors, while the aspect of its banking crisisprecaution and elimination function has not been paid enough attention to. The respect ofthis thesis is to reveal the fact that, the deposit insurance system is not only a safeguardsystem to protect mass depositors, but also a banking crisis salvation legal system, whichcombined beforehand presentiment, simultaneous salvation and postmortem redressaltogether. After introducing the banking crisis salvation function of the deposit insurancesystem in some foreign countries, this thesis recommends the status quo of Chinesebanking crisis, analyzes the deficiencies of Chinese banking crisis salvation legal systemand discusses Chinese necessity of establishing the deposit insurance system. Based onthese analyses, this thesis discusses some important questions, which are closely relatedto the establishment of the deposit insurance system in China.