The Research Of Chinese Non-listed Banks' Deposit Insurance Pricing

With the deepening of the reform of financial system and market-oriented interest rates in China,commercial banks and other financial institutions incresed competition,which lead to raise the possibility of bankruptcy.Disadvantages of the long-term existence implicit deposit insurance system,which guaranteed by the national credit,has become increasingly evident,so it is will not adapt to our country's financial environment.The explicit deposit insurance system as the one of three defense net,which can effectly protect the interests of depositors,and maintain bank credit,and create a fair competitive market environment,has been adopted by many countries.China has published the "Deposit Insurance Act" in 2015 March 31,formally proposed to establish the explicit deposit insurance system,and clarify the implementation of risk-rate of insured bank.But there are large number banks in China,which is uneven each other.So how to identificate banks' risk,and set a level for deposit insurance premium rate,has become a core problem for the explicit deposit insurance system designation.Based on previous research,we found that the current literature mostly limited to China's listed banks deposit insurance pricing,lack of attention to many non listed banks deposit insurance pricing.However,consideration with the actual situation of China's banking industry,the total assets and the market share of many non listed banks are on the increase,which has grown into an important part of China's banking industry.But compared with the listed banks and non listed banks,there is still a large gap on many aspects,such as the total assets,risk management.Those lead non listed banks to face greater risk of bankruptcy in deepening the reform of financial and economic environment.In addition,bank risk has strong infectious characteristics,the long-term neglect of pricing risk of China's non listed banks may lead to the deposit insurance system work failed.Therefore,from the overall consideration of China's banking industry,it is urgent and important to set different deposit insurance premium rates for China's non listed banks.Different with the previous listed banks studies,this paper takes China's non-listed banks as the cut in point,focuses on non-listed banks' deposit insurance pricing.Due to the lack of fully public unlisted banks market data,such as stock volatility,asset value,the probability of default,loss given default,this paper attempts from two aspects of the market analysis method and the allocation of capital,to estimates of LGD and default probability,and calculated the corresponding differential premium rate.The empirical results show that,the average premium rate of China's non listed banks in the level of 1.65%,which reflecting the degree of risk of China's non listed banks is higher than that of listed banks.And the nine representative non listed banks also shows rates stratified,Bank of Shanghai,Bank of Tianjin and other city commercial banks have higher rates,Zhejiang bank,Bohai bank and other joint-stock banks have a relatively lower rates.Those explorations provide a reference value for the non listed banks deposit insurance pricing in China.