The Analysis Of How Commercial Banks Design Deposit Contract Under The Background Of Market-oriented Interest Rates

The reform of interest pricing mechanism's purpose is to promote the efficiency of capital using. But in our country, because of our government's highly attendance to market and the low level of technical innovation, the commercial banks are still playing a significant function in the financial structure. So there are necessities to do some research on the topic of interest pricing. The reform of interest pricing mechanism will change the competition style and mechanism of commercial banks. Before the reform, the price of loan is controlled by the people's bank, and non price strategy becomes the main competition method. But after the reform, commercial banks will get the right of interest pricing, and the main competition method will become price method, so whether a bank has the ability of loan pricing reasonably will be a key factor that determines if it could win a better position in the market.The deposit behavior produces a typically principal-agent problem, and it routs from the fact that depositors put their money into the bank and bank uses their money as an agent. A prime of this paper's discussion lies on some kind of potential insurance provided by government. And a bank's optimum scale of deposit depends on its earning ability. This scale often affects the position in the industry of a bank. So, in an imperfect market, does the optimum deposit scale exist and if it does, how to design? Answers to these questions will affect the reform of commercial banks of China deeply.However, most economists of China ignore the designing of deposit contract when they study the corporation governance. And similar papers written by foreign researchers are not that much too. Some foreign literatures about this topic are written following the theory of incentive to analyze the arrangement of deposit contract. This paper adopts the same method and discusses through several different perspectives on how to price the loan reasonably. And this can make the commercial banks achieve the ability of pricing a loan in an imperfect market to obtain its maximum profit. This paper will discuss the topic"commercial bank's loan pricing behavior under the background of reform of interest"through 4 chapters.In the first chapter, the paper will introduce the basic model and analyze the agent problem of one-period deposit behavior in a general frame. On the assumption that there is no difference with the information between banks and depositors, the paper acquire an optimum deposit scale through the analysis of marginal benefit and marginal cost. And then, the paper discusses how to design a deposit contract under imperfect information. After that, the paper discusses to what extent the information exchange could influent on the deposit contract. Finally, this part discusses the anticipation restraint under the reversion choice, followed three aspects to elaborate.Chapter two extends the basic model to two periods and adopts the assumption that information changes with time. In this part, the paper discusses the design of optimum deposit contract under two different conditions. It talks about the subject that how other financial instruments could affect the process of forming a contract. The scale of deposit, the other kind of financial instrument and the price of institution product are the main factors determining deposit price. Following the model in chapter 1, and following the assumption that banks have the ability to pay depositors all the time, this chapter will analyze the dynamic model through three different categories.The third chapter will extend the basic model farther through relax some constraints. All the chapters before chapter 3, although they are dealing with different agent problem, they follow some common constraints. And this chapter is to remove these and extend the basic model farther. Of course, these extends must not be exclusively, and it is not the purpose of the chapter. What this chapter shows us is the possible direction of the model's deduction.Chapter 4 analyzes the punishment to depositors who draws their money before its maturity. Before this part, contracts are suggested could execute without any cost, and the contract enforcing is based on a punishment which could stop the depositors drawing money before the deposit's maturity. This chapter talks over how could banks protect themselves through an effective contract.