Academic Journal of Business & Management, 2024, 6(9); doi: 10.25236/AJBM.2024.060907.
Yaowen Hu1, Wentao Zhu2
1School of Business, Soochow University, Suzhou, China
2Department of Mathematics, London School of Economics and Political Science, London, United Kingdom
This paper investigates the impact of China's deposit insurance system on the risk levels of A-share listed commercial banks, offering policy recommendations. The deposit insurance system, implemented in 2015, is vital for financial stability and depositor protection. Using a difference-in-differences (DID) empirical analysis on data from 2007 to 2023, the study finds that the deposit insurance system significantly reduces non-performing loan (NPL) ratios among commercial banks. The analysis reveals that larger banks experience a diminishing impact of the system on risk levels, indicating a significant marginal diminishing effect. Regional factors do not significantly affect the reduction in NPL ratios, demonstrating the policy's uniform effectiveness nationwide. The findings provide guidance for risk management and contribute to the stability of China's financial system, offering relevant policy recommendations for regulators, insurance institutions, and commercial banks.
Deposit Insurance System, Commercial Bank Risk Levels, Non-Performing Loan Ratio, Difference-in-Differences Model
Yaowen Hu, Wentao Zhu. How Deposit Insurance Systems Impact the Risk Levels of Commercial Banks: An Empirical Analysis Using the Difference-in-Differences Method on A-Share Listed Banks. Academic Journal of Business & Management (2024) Vol. 6, Issue 9: 44-54. https://doi.org/10.25236/AJBM.2024.060907.
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