An Empirical Analysis Of International Deposit Insurance System To Promote Financial Stability And Its Implications

Since the United States of America established the deposit insurance system the in 1930s, the deposit insurance system has been greatly promoted over the world. As an economic giant,China has not established any insurance funds, and there is neither a scope of deposit insurance nor any compensation methods. With the deepening of the reform of China’s financial system, and the full liberalization of lending interest rate control by central bank, establishment of deposit insurance system is in an urgent need. Therefore, the government claimed to launch "deposit insurance regulations", and to establish public deposit insurance system in the "12th Five Year Plan". However, whether the deposit insurance system will promote financial stability in the theoretical field or not is uncertainly, and what factors that could affect deposit insurance system needs research.In order to solve the two problems above, this paper adopts the combination of theoretical analysis and empirical analysis method to study step by step. Firstly, this paper analyzes the factors that may influence the effect of the deposit insurance system by theory, which also paves the way for the following research. Secondly, this paper uses Logit regression model, by selecting 64 countries ’1984-2012 years’ panel data as the sample. The quantitative study of the deposit insurance system on the impact of the financial stability of the relationship is the next. Finally, the paper draws the conclusion according to theoretical analysis and empirical study results, and puts forward feasible policy recommendations on the basis of the facts.