Study On The Pricing Of Deposit Insurance

Today, financial globalization is developing rapidly, how to ensure the efficient operation of financial security has become an unavoidable issue. Since 1930s, deposit insurance system, a system arrangement protecting banks and other depository institutions, has been recognized by more and more countries.Currently, the biggest shortcoming of the deposit insurance system is that adverse selection, moral hazard. But the root cause of these problems is not a reasonable rate of the required standards. Therefore, whether a deposit insurance system was established properly or not; whether it can maximize their protection function or not; the key lies in the pricing of deposit insurance is reasonable to design a rational pricing of deposit insurance,and it has become the key of the deposit insurance system to solve drawbacks.In our country, financial industry has long been provided by the Government's fiscal revenues and the government's reputation. This implicit deposit insurance system can easily lead to moral hazard, and the banks can do for their excessive risk-taking behavior to incur additional costs. In recent years, as China's financial market development and opening up the hidden dangers implicit deposit insurance have become increasingly prominent, in order to safeguard the safety of the financial system, many domestic experts and scholars called for the establishment of explicit deposit insurance system, and this voice becomes more and more high.June 10,2005, the PBC issued the "2004 Annual Report". Financial stability as a separate chapter, in which the deposit insurance system was listed as the main task of financial stability in 2005, is the first time in an official document of the central bank. In 2007, led by the central bank and the China Banking Regulatory Commission, the relevant ministries and commissions to participate in the deposit insurance system, the working group has been formed, and the State authorities are also promoting the legislation of "Deposit Insurance Act". Anyway, the establishment of deposit insurance system has been put on the agenda, but how to establish a rational and effective deposit insurance system remains to be explored.In this paper, the pricing of deposit insurance as the main object of study, draws on the results of overseas researches. First, the basic theory of the deposit insurance system has done a general introduction, including the deposit insurance system, the emergence and development of the main elements of the system and so on. Then, mainly related to the pricing model of deposit insurance and the more mature pricing ways in foreign countries are introduced. So it will help us to find the right way in our country. On the basis of the theoretical study, using a combination of quantitative and qualitative analysis method, combined with the actual situation of our bank deposits, in order to develop our country's deposit insurance pricing system. Through bank assets, total deposits and other data, we will find a price range. Finally, according to China's national conditions, summed up the issues needed to pay attention in pricing the deposit insurance, and put forward some ideas.The main contribution of this paper is:When establishing our deposit insurance system is still in the stage of a difficult dispute, according to current international and China's financial situation, comparing the situation in the past, we can find the establishment of deposit insurance in China is necessary. While the first deposit insurance in the United States was established under the influence of the financial crisis, but the manifestation of the current crisis is different from the past. We need consider the present and do the specific analysis. Meanwhile, use the Merton option pricing model and the expected loss pricing model together, complement each other, and put forward our views. Finally, we can give the pricing proposal of deposit insurance, and provide references for the relevant agencies to establish systems.