Analysis Of Market Discipline Mechanism And Effect About Chinese Insurance Companies’ Subordinated Debt

As a core component of the modern insurance regulatory system, solvency regulation is not only the key to protect the interests of the applicant, but also the leading factor of insurance industry’s long-term, stable and sustainable development. Industry rapid growth, however, and capital market recession, decline in the solvency of insurance company has become a general trend. In order to make up for the lack of solvency, insurance companies actively seek various channels to raise funds. However, at present, insurance companies in our country face the issue of narrow financing channel. In international practice, the insurance companies adopt the very effective way of issuing subordinated debt capital to improve the solvency.As a kind of new financial instruments, subordinated debt creates a new group of stakeholders——subprime lenders. Compared with other insurance company stakeholders, they are highly sensitive to the risk behavior of insurance company, so, their motive and purpose is highly consistent with the supervision department. The particularity of subordinated creditors’interests determines that it can provide which is different from shareholder and other creditors. Market discipline mechanism is beneficial to enhance the competitiveness of insurance companies, reduce the management risk of insurance companies, enhance ability to resist risk and constantly improve the internal and external governance mechanism of insurance company. At last, insurance company’s risk-taking behaviors change.The purpose of this paper is to research insurance subordinated debt market discipline mechanism and effect in our country. It analyzes the reality of the insurance subordinated debt market discipline effect in our country using the method of case analysis. At last, this paper puts forward suggestions for improvement. The article is divided into five parts, the main contents are roughly as follows. The first part is introduction, mainly introduces the research background and significance of thesis, as well as the main research methods.The second part is the basic theory of insurance subordinated debt. This part defines the meaning of the insurance company subordinated debt, and analyzes its essential attribute——debt, capital and subprime, then, the role of insurance subordinated debt are introduced.The third part is the analysis of insurance subordinated debt market discipline mechanism. First of all, this paper analyzes the connotation and operating mechanism of market constraints. On this basis, put forward the market discipline of insurance subordinated debt.The fourth part is to analyze the reality of insurance subordinated debt market discipline effect in our country.The fifth part is the analysis of research conclusion, and the resulting revelations.