The Establishment Of A Deposit Insurance System In China

The banking industry plays an important role in the national economy, even in those countries and regions with high ratios of direct financing. Therefore, how to ensure the stability of this industry is an important issue that every country must consider seriously.Although China has not suffered any serious financial or banking crisis, the threat of financial crises has become obvious with the development of China's reforms in the economic and financial systems. The key to ensuring China's financial safety is to establish and perfect the financial safety net. One of the possible means is to establish a deposit insurance scheme, for the fact that most developed countries and many developing countries have adopted deposit insurance schemes shows that such a scheme has its merits. Therefore, we must explore theoretically the following two questions: does China need to adopt a deposit insurance scheme? If so, how to practice deposit insurance? It is the purpose and significance of this dissertation to try to answer these two questions.This dissertation consists of the preface and the main body, which itself consists of the theoretical and practical parts. The theoretical part makes a brief introduction to deposit insurance, while the practical part discusses the specific issues about China's practice of deposit insurance. This dissertation begins with the theories, and then deepens into the practical issues with the aid of theoretical analyses. The contents of each part are as following:The preface firstly makes a brief analysis on the importance and fragility of the banking industry. Banks have the functions of financing, credit creation and payment intermediation, etc. But due to their operating features, banks are very fragile, and the information asymmetry between the public and the banks will change this fragility to instability undercertain circumstances. The introduction of a deposit insurance scheme can prevent the information asymmetry from causing banking crises. The preface then explains the purpose and significance of this dissertation, and illustrates the research methods.The second part of this dissertation aims at theoretical analyses on deposit insurance to pave the road for the third part. It first analyzes the theoretical foundation of deposit insurance, i.e. the information asymmetry between the banks and the public. It then goes on to make a comparison of deposit insurance and commercial insurance. The two insurance forms share the same operating principle, but they are different in such aspects as their aims, participants and functions, etc. The features and functions of deposit insurance are also discussed in this part. The second key point of the theoretical analyses is to compare the two deposit safeguard schemes. In view of the importance of the banking industry, every country provides safeguard for bank deposits. The only difference is that the forms and degrees of such safeguards are varied. Therefore, it is more realistic to compare the different forms of deposit safeguards than to make comparisons between the situation with deposit insurance and the situation without any deposit safeguard. The two forms of deposit safeguards discussed here are the implicit one and the explicit one, the latter of which is what we generally call deposit insurance. The significance of deposit insurance is demonstrated through the comparison of the two deposit safeguard forms.The theoretical analyses in the general sense are followed by the discussion of China's practice of deposit insurance. This is the third part, which includes Chapter II and Chapter III.Chapter II analyzes the significance of deposit insurance for China. Because of China's unique economic and financial environments, deposit insurance is much more important for China than for those developed countries. In China, deposit insurance has such functions as ensuring thestability of the banking industry and national economy, replenishing banking supervision, stimulating fair competitions among various banks...