Pricing Method Of Deposit Insurance And Realistic Choice In China

For a long time, our country is a kind of implicit deposit insurance system, that means when commercial banks is in the face of bankruptcy and crisis, the state shall adopt measures to protect the interests of depositors. The system led to many problems:no strong sense of commercial bank risk managements national finance burden, internal control mechanism is not sound and financial market reform is difficult to promote. Nowadays, interest rate marketization in our country have entered substantial phase, which means a huge challenge for commercial banks. In the situation of increasing interest rate volatility and intensified market competition, banks will have to bear the risk of increasing interest rate and the reducing pressure of deposit and lending. And small and medium-sized commercial banks and rural credit cooperatives will face bigger challenge because of the restriction of financial strength、talent and technology, what’s worse, some banks may go bankrupt because of poor management.As an important part of financial safety net, deposit insurance system plays a positive role in protecting the interests of the depositors, preventing bank’s risk and stabling financial order. From the point of domestic and foreign scholar, deposit insurance system is a kind of development trend. In the design of deposit insurance system, insurance premium pricing is the essential question. Reasonable premium rate is beneficial to maintain the balance of deposit insurance fund, to effectively avoid the risk of moral hazard and adverse selection,to be of great significance to the healthy and stable development of deposit insurance system. On the choice of deposit insurance pricing method, through comparative analysis, domestic scholars agree that the expected loss pricing method is more accord with the actual situation of our country, which also provides a basis for the writing of this paper.Therefore, this paper will revolve around deposit insurance pricing. First of all, factors of the deposit insurance pricing will be introduced from three aspects of policy-holder and insurance forms-, setting of insurance rate and charging mode、 scope of compensation. Then this paper will discuss Merton option pricing methods and expected loss pricing model in the aspect of assumptions、the related parameters、the basic principles、main methods and subsequent development.In the same time,this paper will discuss the relationship between deposit insurance pricing models and illustrates the advantages and disadvantages of common pricing methods and the scope of application. Through the comparative analysis, this paper argues that the deposit insurance pricing method from the perspective of commercial bank capital allocation is accord with the actual situation of our country. After collecting commercial banks related data, this paper analyzes rate calculation of state-owned commercial banks、joint-stock commercial banks and other small and medium-sized banks respectively, finally put forward some policy suggestions according to the results.