Research On The Moral Hazard And Prevention Strategy Of Private Banks Under The Deposit Insurance System

The creation and growth of private banks can solve a series of problems, such as the financing difficulty of small and medium enterprises, which is an important part of the reform of China's financial system. With the support and encouragement of the national policy, many listing corporation are actively planning the establishment of private banks. March 2014, the first batch of five private banks pilot through the number of research and demonstration by the China Banking Regulatory Commission, and finally entered the implementation phase. The five companies pilot located in the eastern part of the economic activity area, and took the risk of self Tam, shareholder qualification, shareholder supervision, differentiated management and risk management of the five different conditions. December 12, 2014 Qianhai Shenzhen micro public banks allowed to open, that means opened a new era of private banks in China. In 1993, China first proposed the establishment of deposit insurance funds, triggered a discussion on the deposit insurance system, after 22 years of exploration, China has a relatively complete theoretical basis and optimization of the system environment. In May 1, 2015, China's deposit insurance regulations promulgated and implemented. When new private banks pilot met the deposit insurance system, discuss the advantages and disadvantages of private banks in the deposit insurance system, to explore the private banks face the risk of moral hazard and strengthen prevention and put forward policy recommendations, stability of the private bank in our country and for the healthy development of the financial environment has very important significance.Deposit insurance system to create a more fair competitive environment for private banks, but to a certain extent, an increase of its moral hazard behavior, mainly reflected in the following aspects: First, the moral hazard of market access. The introduction of national support policies and the implementation of the deposit insurance system, stimulate the private enterprises to set up private banks, regulatory authorities due to the existence of information asymmetry, difficult to identify private enterprises establish a bank's real purpose, it's hard to avoid deviation in the audit of the link, making some of the poor quality of the financial institutions to enter the market, increase the instability in the financial system. Second, private bank manager's moral hazard. As a result of the implementation of the deposit insurance system, for depositors and property security provides security and the security enhancement may lead to private banks blind pursuit of high profits, to engage in high risk activities. Third, the moral risk of the private bank shareholders. In a certain extent, private enterprises to set up, solves the financing problem of itself and its affiliated enterprises, but easily generate shareholder blind or excessive loan problems, which affect the private banks, the healthy and orderly development.Private banking moral hazard may against the establishment of a deposit insurance system in mind, to the development of private banks bring unfavorable factors, may even affect the stability of the financial system as a whole. Therefore, moral risk control of private banks and to ensure the smooth implementation of the deposit insurance system, deposit insurance system of the effectiveness of the optimal are very necessary. This paper is divided into five parts of the moral hazard problem of private banks were presented and discussed : the first part, ask questions, and to illustrate the significance of this paper, and summarizes the basis of domestic and foreign literature review put forward the innovation of this paper and shortcomings; The second part, this paper analyzes the characteristics of private banks in China, introduces the development of private banks and the development trend of private banks in China; The third part, this paper focuses on the dual influence of the deposit insurance system on the development of private banks in China, and then introduces the formation mechanism of the moral hazard of private banks; In the fourth part, introduced the United States, Germany, Japan and other developed countries to improve the experience of the deposit insurance system process and prevent moral hazard; the fifth part, combined with the specific circumstances of the economic development of our country, put forward strategies of private banking moral hazard prevention. Although the deposit insurance system of our country specific policy has been promulgated and implemented, but with the economic situation in the economic development of our country "new normal", not only improve the deposit insurance system itself, also need to improve risk control system and information disclosure system, strengthen its matching the external institutional environment improvement to establish effective market exit mechanism. Through the system to improve and change, we can will the moral hazard of private banks down to minimum to make it constantly in a fair competition environment for the development of grow.