Study On Establishment Of Deposit Insurance System In China

Since the 1980s, banking crises have taken place in developed and developing countries from time to time. This makes the governments pay great attention to the safety of the financial net, specially the structure of the deposit insurance. The deposit insurance system is an important way to maintain financial system safety. A lot of countries have adopted it in avoiding the risk of the depositors' withdrawing money crowdedly. With the development of financial system innovation going deeply, the competition in finance becomes fiercer. Therefore in order to protect the benefit of the depositors and maintain the stability of the financial system, the government should establish definite deposit insurance system fast.Firstly, this essay introduces the causes of deposit insurance system and its status quo. The theoretic basis and function of deposit insurance system are expounded as well. Although the deposit insurance system is useful in maintaining the stability of financial system, it brings moral hazard and adverse selection problem. Modern modeling-methods provide us an available way to analyze the defects of deposit insurance system and give advices in reducing its negative effects. Because of the fragility of financial system, the establishment of deposit insurance system is necessary and practical in the interests of depositors. Finally,we include the international experiences on deposit insurance system and expound some key issues of deposit insurance, such as organizational form, coverage, covering level, protect degree, deposit insurance premium, founding source, etc., reference and experience aiming at providing for the extablishment China's deposit insurance system.