| dc.description.abstract | For the purposes of promoting banks in Taiwan and in Mainland-China being safely and soundly operated and improving the stability of banking system in both territories, construction of a finance safety net and its excution are a major policy of government performance. Deposit insurance scheme is an important element in the financial safety net and has been chosen and studied as a main subject in this thesis. Methods of study include literature review and case analysis. Discussion on the possible negative phenomena due to the implementation of deposit insurance scheme is made. The characteristics of a sound deposit insurance scheme and the principles of bank-failure resolution are delineated. Then, suggestions from international finance organizations on deposit insurance scheme and bank-failure resolution are collected and analyzed. The present operational situation of deposit insurance scheme and measures of resolving problematic banks in Taiwan and in Mainland-China are studied. The shortcomings of the present scheme operated in Mainland-China and differences of the scheme between Taiwan and Mainland-China are compared. Finally, suggestions on establishment, implementation and adjustment for the respective scheme excuted in Taiwan and in Mainland-China will be made.
Research background, motive, goal, and research method and steps have been outlined in the 1st chapter in this thesis. In the 2nd chapter, elements of a finance safety net, the system of finance supervision and of the lender of last resort in Taiwan and in Mainland-China have been introduced. Suggestions regarding to the deposit insurance scheme and the bank-failure resolution from international finance organizations are described in the 3rd chapter in order to study the negative phenomena including adverse selection, moral hazard, and agency problems due to the execution of deposit insurance scheme. The characteristics of a sound deposit insurance scheme and the principles of bank-failure resolution are also discussed. The present operational situation of a deposit insurance scheme, the measures used for resolving a problematic bank in Taiwan and in Mainland-China, and the shortcomings of the scheme in Mainland-China and differences of the scheme in Taiwan and that in Mainland-China have been illustrated in the 4th chapter. In the 5th chapter, suggestions on the establishment, implementation and adjustment of the scheme in Taiwan and in Mainland-China have been made as the conclusions of this thesis. Suggestions for improving the scheme in Taiwan are made with reference to that in US. In the last chapter, further researches related to the topics studied have been suggested.
Conclusions in this thesis are:
1. Suggestions for adjusting the deposit insurance scheme in Taiwan
(1.1) Central Deposit Insurance Corporation (CDIC) should be conducted as a limited liability company, and manifest to public interest, independence, specialty, and exclude regulations which disaccord with the established goal of the scheme and the duty of CDIC, (1.2) CDIC should be authorized with a right to inspect insured institutes, to take disciplinary action against these institutes, to upgrade measures to resolve problematic banks chosen by CDIC, and to take essential measures. The personnel in CDIC should be authorized to exempt from lawsuit and responsibility of compensation. Prompt corrective actions and a mechanism of bridge bank should be introduced and excuted by CDIC, (1.3) Viewing on the influence of financial holding company (FHC) on the risk raised from CDIC’s insurance of banks, the situation that FHC’s business and financial connections are closely related with banking subsidiary should be anticipated and, thus, FHC should allow to receive the financial assistance, (1.4) Full scale of deposit insurance fund and a securable storage of the fund should be maintained. It is necessary to increase properly premium rate, number of categories and the range for premium of each category, to state treasury guarantee to the finance applied by CDIC to central bank, and to allow CDIC to issue bonds guaranteed by government, (1.5) Operational risk of credit department in farmers’ or fishers’ associations is higher than that in banks. A single deposit insurance fund should be divided into fund of credit department and fund of other banks, (1.6) A mechanism being able to flexibly deal with a systemic baking crisis should be established.
2. Suggestions for establishing the deposit insurance scheme in Mainland-China
Mainland-China government has necessity of establishing an explicit deposit insurance scheme. The reasons are (2.1) Moral hazard incurred from an explicit scheme is lower than that from an implicit scheme, (2.2) A explicit scheme can reduce the fiscal finance burden of government, (2.3) An explicit scheme can maintain the independence and effectiveness of monetary policy implemented by the China People’’s Bank, (2.4) An explicit scheme can institutionalize the payoff of deposit debts and the resolution of problematic banks, (2.5) An explicit scheme is helpful to separate four state-owned banks from the government credit, and also to reduce intervention in these banks from central government, (2.6) An explicit scheme can promote the fair competition among four state-owned banks and the middle or small scale banks, (2.7) An explicit scheme favors the internationalization of banking industry of Mainland-China, (2.8) Deregulation of interest rate should cooperate with an explicit scheme.
In order to avert and resolve banking crisis, Mainland-China government, apart from establishing explicit scheme, should take account of (2.1) improving the situation that the central and local governments intervene banks business and exit, (2.2) reinforcing mechanisms of financial supervision, banks rating, early warning of bank crisis and information disclosure, (2.3) promoting risk-awareness and understanding of the explicit deposit insurance scheme from both the banks and the public, (2.4) constructing a complete mechanism for resolving problematic banks and their exiting, and (2.5) establishing a better and healthy society credit system. | en_US |