The Impact Of The Interaction Between Interest Rate Marketization And Deposit Insurance System On The Systematic Risk Of Banks

How to avoid the systemic risk is very important to China in market-oriented interest rate reform process.Based on the data of banking systemic risk,interest rate marketization and deposit insurance system in 88 countries of the world for 1973-2016 years,this paper establishes a panel logit model.First,the effect of interest rate marketization on the systemic risk of the bank is explored.Second,based on the timing of marketization of interest rate and the introduction of deposit insurance system,two different policies of "market-oriented interest rate liberalization after deposit insurance system" and "market-oriented deposit insurance system with first interest rate",as well as the different policy effects of launching the deposit insurance system at different stages of marketization of interest rates are explored.Further explore the differences between developed and developing countries after the introduction of deposit insurance system during the marketization of interest rates.Finally,the impact of different deposit insurance system design on the systematic risk and what kind of deposit insurance system is suitable for the underdeveloped countries are futher exlpored.The results show that during the market-based interest rate reform,the systematic risk of banks will increase,the establishment of deposit insurance system will not weaken this crisis effect.However,after the completion of the interest rate liberalization reform,the deposit insurance system has shown some restraining effect on the systematic risk of banks.The moral hazard arising from the introduction of the deposit insurance system in underdeveloped countries during the marketization of interest rates is even greater.The impact of the design of different deposit insurance systems on the systematic risk of banks is different under the marketization of interest rates.The moral hazard caused by the design of some deposit insurance systems in developing countries is more significant,such as fund operation,scope of security and so on.The enlightenment obtained by this article is as follows:The marketization of interest rates will lead to an increase in the bank's systemic risk.Therefore,for China,which is in the process of transformation,improving the regulatory system and improving the design of the deposit insurance system are crucial to the healthy and stable development of the banking industry.