There are two methods widely used for evaluating the adequacy of Deposit Insurance Fund： （i） Target Reserve Ratio and （ii） Credit Risk Model. Target Reserve Ratio is one of the macro level indicators more often s...There are two methods widely used for evaluating the adequacy of Deposit Insurance Fund： （i） Target Reserve Ratio and （ii） Credit Risk Model. Target Reserve Ratio is one of the macro level indicators more often set by Regulatory act on the basis of minimum Deposit Insurance Fund margin safety, Target Reserve Ratio is calculated as the ratio of Deposit Insurance Fund to the value of insured deposits. However, TRR does not take into consideration the level of Deposit Insurance potential liability, the Loss at Given Default （LGD） and the historical trend of default rate prevailing among the insured banks. It does not also consider the present condition of the economy and current scenario of the banking sector. This paper discusses primarily about development of Credit Risk Model for evaluating the Deposit Insurance Fund Adequacy. For this purpose, Econometric Credit Risk Model was developed based on the historical data of bank failures and the associated losses of the last 25 years from 1990-91 to 2014-15. The model assesses various possible factors impacting the Deposit Insurance Fund： Default rate, Deposit growth, Exposures, impact of macro-economic factors like GDP, GDS, Inflation and Interest rate changes, etc. on the Deposit Insurance Fund through econometric modeling. The model evaluates the adequacy of Deposit Insurance Fund under both （i） Normal scenarios where there is no （economic） systemic risk assumed and （ii） Worst case scenario at 1% level of significance using Monte Carlo Simulation. Since the model empirically validates all the critical factors impacting the assets and liabilities associated with Loss at Given Default, the model output can also be used to determine a suitable Target Reserve Ratio and such models are being used in countries like USA, Canada, Hong Kong, and Singapore, etc. （IADI, 2009）. More importantly, the model outputs are quite useful in determining the adequacy of deposit insurance fund which is an effective risk control measure that organization like Deposit Insurance Credit Guarantee Corporation （DICGC） can adopt both under normal economic scenario as well as worst case scenario, ensuring a strong financial safety net for the banking sector in India. The model also assesses the default probability and the Loss at Given Default of different types of banks： commercial banks, rural banks, cooperative banks, foreign banks, etc. A risk based on premium can possibly be determined for each type of banks in India.展开更多
Disease has been one of the top reasons accounting for impoverishment in rural China. The government subsidizes health care through the New Cooperative Medical System since 2003 （ NCMS ）. The paper studies the effec...Disease has been one of the top reasons accounting for impoverishment in rural China. The government subsidizes health care through the New Cooperative Medical System since 2003 （ NCMS ）. The paper studies the effectiveness of various reimbursement arrangements in reducing the financial burden caused by health care in rural China. Using data from China Health and Nutrition Survey（CHNS） , it finds that the severity of illness, the type of illness, medical cost and other costs of the treatment are significantly influencing the choice of a type of treatment. Based on the estimated demand function, the paper concludes that the reimbursement for inmpatient care only has little effect on reducing the financial burden and the incidence of catastrophic expenditure and that expending subsidies to outpatient care is a more effective policy.展开更多
文摘There are two methods widely used for evaluating the adequacy of Deposit Insurance Fund： （i） Target Reserve Ratio and （ii） Credit Risk Model. Target Reserve Ratio is one of the macro level indicators more often set by Regulatory act on the basis of minimum Deposit Insurance Fund margin safety, Target Reserve Ratio is calculated as the ratio of Deposit Insurance Fund to the value of insured deposits. However, TRR does not take into consideration the level of Deposit Insurance potential liability, the Loss at Given Default （LGD） and the historical trend of default rate prevailing among the insured banks. It does not also consider the present condition of the economy and current scenario of the banking sector. This paper discusses primarily about development of Credit Risk Model for evaluating the Deposit Insurance Fund Adequacy. For this purpose, Econometric Credit Risk Model was developed based on the historical data of bank failures and the associated losses of the last 25 years from 1990-91 to 2014-15. The model assesses various possible factors impacting the Deposit Insurance Fund： Default rate, Deposit growth, Exposures, impact of macro-economic factors like GDP, GDS, Inflation and Interest rate changes, etc. on the Deposit Insurance Fund through econometric modeling. The model evaluates the adequacy of Deposit Insurance Fund under both （i） Normal scenarios where there is no （economic） systemic risk assumed and （ii） Worst case scenario at 1% level of significance using Monte Carlo Simulation. Since the model empirically validates all the critical factors impacting the assets and liabilities associated with Loss at Given Default, the model output can also be used to determine a suitable Target Reserve Ratio and such models are being used in countries like USA, Canada, Hong Kong, and Singapore, etc. （IADI, 2009）. More importantly, the model outputs are quite useful in determining the adequacy of deposit insurance fund which is an effective risk control measure that organization like Deposit Insurance Credit Guarantee Corporation （DICGC） can adopt both under normal economic scenario as well as worst case scenario, ensuring a strong financial safety net for the banking sector in India. The model also assesses the default probability and the Loss at Given Default of different types of banks： commercial banks, rural banks, cooperative banks, foreign banks, etc. A risk based on premium can possibly be determined for each type of banks in India.
基金The author is grateful for financial support from the National Science Foundation of China （70573024）.
文摘Disease has been one of the top reasons accounting for impoverishment in rural China. The government subsidizes health care through the New Cooperative Medical System since 2003 （ NCMS ）. The paper studies the effectiveness of various reimbursement arrangements in reducing the financial burden caused by health care in rural China. Using data from China Health and Nutrition Survey（CHNS） , it finds that the severity of illness, the type of illness, medical cost and other costs of the treatment are significantly influencing the choice of a type of treatment. Based on the estimated demand function, the paper concludes that the reimbursement for inmpatient care only has little effect on reducing the financial burden and the incidence of catastrophic expenditure and that expending subsidies to outpatient care is a more effective policy.
