Study Of Bancassurance Principal-agent Problem

After the 1980's in the 20th century, global economic integration accelerates. The investors and fund-raisers have the free choices of investment vehicles and conduits in the global context. Capitals financing costs and benefits are undergoing a fundamental change. Commercial banks in poor financial services based on traditional deposits and loans are in need to find new profit growth point and have extended the sources of funding to meet the financial needs of increasingly diversity. Insurance companies which used to be engaged in traditional risk coverage are now based on strategic investment business level. This new form of bancassurance has been a product of this particular period. Banking and insurance cooperation model has gone through the three phases:sales agents, strategic alliances, and financial holding groups. China is still in the early phase of development banking and insurance, i.e. sales agent phase. The bancassurance participants, i.e. insurance companies, agents, and consumers have the conflicts of interest with regulators because of the asymmetric information with the bounded principal-agent problem. This thesis studies the existing issues and the key points to solve them in current bank insurance system by using the principal-agent theory.In this study, finance, management science, statistics, information economics and other disciplines of knowledge theory are used with a combination of theoretical investigation and empirical analysis. The study of the problem takes a combination of a few methods using qualitative and quantitative analysis. Firstly, this thesis outlines the definition and characteristics of bank and insurance; secondly, the banking insurance theory, the domestic/foreign bancassurance research and literature were reviewed. Thirdly, the development process of China's bancassurance, development status, and internal features were analyzed. The development of China's banking insurance principal-agent problem were also analyzed in terms of exists and causes. Fourthly, the development of practice in the context of banks on the basis of the insurance and bank insurance agency relationship for the game model has been discussed and the conclusions are given; and then the development experience of western national bank insurance has been compared to the insurance environment of China's banks the in term of the financial legal environment, regulatory environment, tax environment, and human environment and the existing issues and development direction are obtained based on these comparisons. Finally, the model results and business practice solutions are proposed to solve China's banking insurance principal-agent problems from a macro and micro level.