Research On Deposit Insurance System And Its Utilization In Our Country

From the foundation in 1930s, deposit insurance has been a vital institution because of its importance in protecting the benefit of depositors and stabilizing the financial system. However, deposit insurance also brings about some risk that can decrease itself's effects, even destroy the stability of financial system if there has not effective measures to control, for example, moral risk and adverse selection. So ,this dissertation focuses on the cause and function of institutional risk and risk control.Along with our country monetary system reform deepening, the competition mechanism that superior win and the inferior wash out market occupies the leadership in the financial domain, so some financial organs fall into the crisis in the intense market competition even to go bankrupt go out of business. The 1990s, the event appears that one batch of financial organs bankruptcy goes out of business. Although, the government that takes the backing of these organizations, took some measures to carry on rescues, because lacked a perfect deposit insurance the system, these measures have brought very many questions to the government, the central bank and so on various aspects, and enlarged the cost that has rescued the question bank. Therefore, founding our country the deposit insurance system imperative, the central bank also already raised the formulation of deposit insurance system the date.On the base of the foreign research, the author firstly introduces the basic theory of deposit insurance, including the institution's foundation and development, main content, theoretical base, and functions, then deeply demonstrates the formation of moral risk and adverse selection with the theory of game and some mathematics models. The author thinks that moral risk is being born in financial system because of the bank's deposit financing mode and information asymmetry, and deposit insurance on one hand loosens the bank s pressure that comes from the depositor s supervising and choosing the deposit bank cautiously, on the other hand activates the bank s risk motive that can place a premium on institutional risk ,especially when the fixed premium ratio and voluntarily-entering are applied. Moreover, unreasonable arrangements in deposit insurance produce adverse selection. After these, on the base of other country s successful practice the anthor brings forward the effective measures to control risk by the numbers.Finally, the policy advice to control institutional risk in China s deposit insurance is brought forward.