Abstract
China has adopted implicit deposit insurance with government credibility as the guarantee. This is determined by the characteristics of China’s national economy. With public ownership as the foundation of the banking system, the state provides credibility support to state-owned banks, providing a guarantee for deposits. People do not have to worry about the security of their deposits and deposit their money in state-owned banks, accepting low interest rates. Bank savings have always been the preferred way for people to dispose of unused funds since an environment of risk awareness has not been cultivated. Although the government has to bear a huge burden, this plays a very important role in the stable operation and development of the Chinese financial system in the midst of economic reform.
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Notes
- 1.
Source: Public reports of the central bank capital injection into the China Development Bank.
- 2.
Also known as the “provision adequacy ratio,” this refers to the loan loss reserve ratio for non-performing loans (i.e. the use rate of provisions for doubtful and bad debts). It mainly reflects a bank’s ability to make up for loan losses and prevent loan risks.
- 3.
Including ICBC, CCB, ABC, and BOC.
- 4.
Refers to banks with total foreign currency assets of less than 2 trillion yuan and cross-border operations (foreign currency assets at the end of 2008 for each bank as the reference standard).
- 5.
Source: People’s Bank of China website historical statistics for financial institution credit balance of payments.
- 6.
People’s Bank of China website historical statistics for financial institution credit balance of payments.
- 7.
Deposit insurance agency subrogation repayment authority means that after compensating depositors for their losses, the agency has the same subrogation rights priority as general creditors.
References
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He, D. (2016). Institutional Construction (2)—Deposit Insurance System. In: Financial Security in China. Research Series on the Chinese Dream and China’s Development Path. Springer, Singapore. https://doi.org/10.1007/978-981-10-0969-3_9
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