latter bankruptcy assume the losses. In return, the DepositInsuranceFund must be given real decision-making power in bankruptcy, and use it to clearly state the rules of the game. The longer an insolvent depositary institution remains in business, the more its managers are tempted to engage in risky lending operations hoping for high returns, which are obviously associated with high probability of losses, plus uninsured depositors have time to withdraw their deposits and therefore more potential losses ultimately transferable to the DepositInsuranceFund increases. Faced with this state of affairs, proposals have been made to make the resolution of bank failures more transparent and, in so doing, to make banks' managers more accountable. The most interesting proposals in this area are those that propose early reorganisations or closures of insolvent banks on the basis of clearly pre-established rules of the game in order to limit the present and future potential losses on depositinsurance. Ainsi, G. Benston et G. Kaufman outlined a method for settling bank insolvency, based on two proposals: - adopting a mark-to- market system to identify problem banks before net worth becomes negative, so here we find an additional argument in favor such accounting policies; - an order to reorganize or close down deposit-taking institutions in the event that regulatory capital (measured at the market value of assets and debts) falls below a pre-determined level.
program are estimated. As already mentioned beside the features of the program like coverage limit, depositinsurancefund or depositinsurance premium recommendations about banking supervision and regulation are vitally important, the process includes more severe requirements of regulators to prevent excessive risk-taking by banks, like higher capital requirements, reducing an incentive for high risk-taking in fear of a greater owners' loss, or to reject insure or compensate deposits of those representatives of managerial bodies who bear the responsibility of bankruptcy, those who made decision forcing bank to face excessive risks resulting the failure, intensive supervisions and examinations of banks' financial conditions to somehow measure the level of risk they are facing and taking measures to prevent such actions. It is also substantial to have public informed about the system of how the program works. Given the importance of communicating with the public combination of public communication techniques and approaches should be considered. One effective communications tool is the mandatory use of official signs that inform the public about degree of protection offered by that country's DepositInsurance Agency. Other communication tools that should be considered are mandatory disclosures of depositinsurance protection in certain advertisements, publications, and public notices. If all followed depositinsurance project presumably is to be effective for a banking industry hence for the economic stability and growth.
In the late 1990s, the ill-conceived macroeconomic policies of Governments, along with the excessive preference for risk-taking on the part of privately-owned banks, led to a similar situation as in the late 1970s, which was characterised by an “over- branched” and “over-staffed” banking system (Zaim, 1995, and Akçay, 2001). As a combined result of (i) non-feasible investment and unprofitable production decisions on the part of domestic industrialists, (ii) the lending connected to this and (iii) illegal activities in the banking sector, the weight of non-performing loans in the banks’ portfolios increased significantly, especially after 1997. At the same time, the increasing open positions of banks on foreign exchange markets gave rise to growing exchange-rate risk. By early 1999, the banking system was very vulnerable to a systemic crisis. In 1999, the State DepositInsuranceFund (SDIF), which had been founded on July 22, 1983, took over six insolvent banks, using the authority given to it in 1994 when full depositinsurance was introduced (see Table 3 and Box 1).
• General: There is the ‘traditional’ transitional issue for depositinsurance. How to get the fund ready at the same time as the guarantee kicks in. Since the European DepositInsurance scheme proposed here would substitute for existing national schemes, it could in principle obtain its initial funding from the existing national funds, which will have a much lower financing need given that the EBA banks account for a large share of deposits. A simple transfer of funds from national depositinsurance funds to a new European DepositInsuranceFund will be troublesome, because not all countries have pre-funded schemes. But this problem may be not that severe in practice, since most pre-funded schemes are currently more or less exhausted as a result of pay-outs during the on-going financial crisis. 3 Moreover, a consensus is emerging for pre-funded
This policy paper first sketches the building blocks of a banking union. Importantly, a new European DepositInsurance and Resolution Authority (EDIRA) should start simultaneously with the ECB assuming supervisory powers. A combination of European supervision and local resolution cannot work because it is not ‘incentive compatible’. Next, this paper proposes a transition period to gradually phase in the European depositinsurance coverage. Finally, we calculate that a European DepositInsuranceFund would amount to about €30-50 billion for the 75 euro area banks that were subject to the EBA stress tests. This Fund could be created over a period of time through risk-based depositinsurance premiums levied on these banks. Once up and running, the Fund would then turn into a European DepositInsurance and Resolution Fund to also deal with the resolution of one or more of these European banks.
provide funding only when an appropriate use of bail-in tools has re-established a solvent entity. It is of course possible that, ex post, an intervention of the SRF leads to losses, but ex ante, this is not a foregone conclusion. Funding a resolution after bail-in should thus be viewed as an investment, rather than an automatic loss. Any investment brings risks, but also a potential upside. This distinguishes resolution funds from depositinsurance funds. The latter only intervene to protect covered deposits, so any intervention by a depositinsurancefund thus signifies a loss. 1 This difference in the nature of the intervention implies that one should
may lead to more bank failures. With depositinsurance, banks are encouraged to …nance high-risk, high-return projects as their ability to attract deposits no longer re‡ects the risk of their asset portfolio (Demirgüç-Kunt and Detragiache, 2002). This crop-up of moral hazard with depositinsurance has been widely supported in the empirical literature. For instance, Demirgüç-Kunt and Detragiache (2002) conclude that moral hazard matters based on the …nding that explicit depositinsurance tends to increase the likelihood of banking crises. Laeven (2002) observed that the cost of depositinsurance has some power in predicting bank failures, which he interpreted as evidence of support for the view that depositinsurance creates moral hazard for banks. His results further show a strong positive correlation between credit growth and the cost of depositinsurance, against which he concludes that depositinsurance promotes excessive risk taking behaviour. In a study of Kansas, Wheelock and Wilson (1995) found out that depositinsurance membership increases the probability of bank failure, consistent with the hypothesis that insurance encourages banks to hold higher risk portfolios than they otherwise would. Similar …ndings are reported by Carapella and Di Giorgio (2004), who demonstrate that depositinsurance increases the lending- deposit spread in banking, the main e¤ect of which arises not from the deposit side, but from an increase in the lending rate. They interpret this result as evidence of the presence of moral hazard behaviour emanating from depositinsurance. Cull et al. (2005) use the volatility of credit to the private sector as a proxy for risk in a cross-country analysis and establish that the decision to introduce depositinsurance increases the volatility of credit and hence risky behaviour in the …nancial sector, particularly in countries with weak institutions.
centralized supervision at the ECB but national depositinsurance and resolution arrangements would not be ‘incentive compatible’ and therefore would not work: instead, they argue that a centralization of all three functions is necessary to establish a well-functioning banking union. Their proposal on institutional arrangements entails the creation of a European DepositInsurance and Resolution Authority (EDIRA), different from the ECB; our scheme, as will be discussed, is slightly different in that it places the ECB at the heart of the system for the exercise of all powers at EU level (while placing elsewhere the management of attendant insurance and resolution funds).
According to both likelihood ratio and Hausman tests, one can reject the null hypothesis that bank specific effects are not significant at the one percent confidence level. W&K probit estimates, as a result, are biased. Random effect probit estimates do not reverse the sign of probit estimates or their statistical significance, but they are significantly larger in absolute value than probit estimates. Random effects probit estimation of bank insurance membership is used in the second stage of the moral hazard test.
Furthermore, Grossman (1992) pointed out that the combination of depositinsurance and deregulation leads banks to undertake more risk. He adds that flat rate insurance creates a moral hazard problem since banks do not bear costs associated with engaging in their risky behavior. Wheelock and Kumbhakar (1995) conclude that insured banks are prone to increase risk-taking in order to avoid subsidizing other insured banks. They argue that a voluntary depositinsurance scheme in which premiums are not sufficiently sensitive to differing risk levels attracts risk-prone banks; however, they find no evidence that depositinsurance encourages depository institutions to hold smaller reserves. Using panel data for 61 countries over the period 1980-1997, Demirgüc-Kunt and Detragiache (2000) conclude that the explicit depositinsurance increases the likelihood of bank failures where the institutional environment is weak. According to their study, the adverse impact of depositinsurance on financial stability is more likely to be stronger when the insurance coverage offered to depositors is more extensive, and where the system is funded and managed by the government.
This paper mainly has two contributions, and I will elaborate on the two as- pects of theoretical contributions and empirical contributions. From the pers- pective of theoretical contributions, with the shift of the focus of Chinese scho- lars in the research of insurancefund investment, research in this field has gradually been neglected; therefore, the appearance of this paper just fills the blank of research in this field in recent years. It’s true that this paper not only makes a relatively complete review of the previous research, but also provides some useful ideas and methods for the scholars who want to study this field in the future. From the perspective of empirical contributions, insurance institu- tions can use risk information to re-adjust the insurancefund investment struc- ture, and further diversify the investment risk. Additionally, they can closely monitor the risk of insurancefund investment, make the institution perfect the internal control mechanism of risk management, and improve the management ability of the market risk. For the supervision department, the risk measurement of insurancefund investment not only can monitor the industry risk and im- prove the risk management system mechanism, but also can enhance the perti- nence and effectiveness of risk prevention.
In this case, insured tractor, financed by bank, met with an accident. Premium of insurance not paid and the claim rejected. The respondent claimed that there was an arrangement of paying the regular premium to the insurance company by the petitioner on behalf of the respondent and same was to be debited from the loan account of the respondent. Commission held that third party insurance is the responsibility of the owner of the vehicle and by any stretch of imagination, petitioner bank cannot be held responsible. PENAL INTERST LEVIED BY BANK.
Health insurance has however not been so successful in the country. By mid of the year 2015, only 20% of Kenya’s population had enrolled in health insurance. This percentage is far below the expectation given that about 42% of her population lives below the poverty line (UNICEF, 2009). Several empirical studies have also shown that the poor are less likely to undertake health insurance yet they are more exposed to diseases because of the environmental conditions they live in and are also highly prone to malnutrition. In addition, their affordability level of health care is lower compared to the rich. Bearing in mind that substantial proportion of the Kenyan population is poor, this study will be of importance in unveiling the factors that individuals consider in undertaking the decision to take up or not take up health insurance (Mitullah (2003).
Though there are a number of di ff erent ways to examine multiple choices (see Putter, Fiocco and Geskus, 2007), a competing risks approach is most appropriate for examining depositinsurance governance choices in the period of interest, as well as new institution variation in general. In theory, none of the governance types is a priori the final choice. Once a country creates a deposit scheme controlled by the central bank it could later make it independent or impose MoF control and then reestablish central bank control, etc. Despite the lack of theoretical justification for these a priori assumptions, data availability significantly influences the ultimate empirical research design decision. There were only five instances between 1970 and 2007 when a country changed governance types after insurers had been established. A convenient way to handle this data limitation is to constrict our research focus on governance decisions for new explicit depositinsurance schemes. This creates three final states as shown in Figure 2. In such situations, competing risks models with mutually exclusive non-repeated transitions are the most appropriate type of EHA (Pintilie, 2007).
Is a converted form of wages that provides "deferred consumption." Due to the compulsory nature of such insurance (by law), part of the salary is alienated from the employee in the form of insurance payments. In other words, part of the salaries of employees and individual entrepreneurs are compulsorily, on the basis of statutory tariffs, reserved for the purpose of providing them with material security in the event of social risks of loss of labor incomes as a result of old age, disability, loss of breadwinner. The need to replace previously earned income in case of implementation of the above social risks assumes a regular long-term nature of pension payments, which, in turn, requires constant maintenance of the purchasing power of the pension throughout the entire period of its payment. At the same time, we note that the obligation to pay pensions is formed during the acquisition of pension rights, and the corresponding costs are incurred after the appointment of the pension, mainly at the expense of income coming during the payment period.
This paper, by using model (4) test whether bank profits by loan loss provi- sions smooth motivation abate or not, regression results as shown in Table 5. We can found that depositinsurance system and pre-tax profit before provisions by a significantly negative, illustrate the promulgation of the depositinsurance system indeed suppresses the bank using loan loss provisions for income smoothing, so as to verify the hypothesis three. By comparing the various re- gression results, we found that the bank is in the depositinsurance system fol- lowing the promulgation of increased provision of loan provisions, but not for profit motive of smooth, regression results that the bank is out of risk preven- tion, the influence of system increases the loan loss provisions, not out of reach a certain purpose and increase the provisions of the loan. In addition, we use model (4) for grouping size banks after the handover, found that assumes that the same data the results are the same, the big banks used to make a profit mo- tive of smooth loan loss provisions, small profits smooth motivation to change is not obvious. Visible, the implicit insurance system of shelter under the risk re- sponse measures taken by the big banks more apparent, small banks in front of the dominant system of insurance issued has been largely out of state for them- selves, so the profit smooth motives are not under the influence of the system is too big.
As a result, the insurancefund created to provide a resource and refuge for injured workers has substantially changed and no longer meets the goals and ideals for which it was created. Rather, the system fosters misdiagnosis, impedes ability to amend to include accurate diagnoses and delays prompt and appropriate care. From a physician’s standpoint the system appears to be designed to delay treatment, escalate cost, and defer resources away from the injured worker and the health delivery system whose goal is to restore health. The result is a legal and bureaucratic entanglement in which it seems that a large percentage of the insurance dollar is spent on the system itself rather than on the injured worker.
At a deeper level in the Stata time trend chart can be found in 16 commercial banks volatility in 2013-2014 showed a downward trend, which may be the gov- ernment capital injection and the non-performing loans write-off policy gradu- ally emerged after the financial crisis, coupled with the major commercial banks self-management capacity and risk control capabilities have improved signifi- cantly after the financial crisis. 2014-2015 is an upward trend, probably because of the boom and decline of the stock market during that period. Volatility showed a downward trend once again in 2016, the government enhanced the supervision after the fusing, and the introduction of the commercial bank as- sessment system and the depositinsurance system on the behavior of commer- cial banks gradually affected. The time chart of the franchise of commercial banks is not consistent, but overall, it is relatively stable in other periods after experiencing a short rise in 2014, the simultaneous rise of commercial banks in 2014 is related to the hot stock market in the second half of 2014. While in the other period the stable franchise value shows that although China’s banking in- dustry competition further intensified, the interest rate control is more and more loose, more private banks get a banking license, reduces the franchise value of market factors. But the reform also makes the bank’s own business space to fur- ther expand, resource allocation and management efficiency significantly enhanced. The ability to use franchising conditions and advantages to obtain economic rents significantly enhanced, improve the franchise value of banks, the two factors make the performance of the bank’s franchise value is relatively stable.
National government’s effort to raise pension funds, such as increasing financial investment, is the most direct way. In order to protect people’s future life, there is a need to expand the government pension expenses. For China, the social security spending accounts for 12% of China’s fiscal expenditure, far below the 30% -50% ra- tio in Western countries, and even in some middle-income countries the ratio is more than 20%. Therefore, Chi- na still has much space to increase the investment in pension. From 2010 to 2013, the proportion of the basic pension insurancefund expenditure in GDP increased showing an upward trend. On the UK’s national condi- tions, the expansion of fiscal spending and increased investment in pension funds may not be a wise move. However, faced with such a huge deficit, the British government can only achieve relatively tight fiscal policy . Government must measure the current ratio of state pension fund payments and expenditure, and put more appropriate investment for pension on the basis of smooth economic operation.