Assessing the Adequacy of Deposit Insurance in Iran Using The Systemic Model Of Banking Originated Losses(SYMBOL)

DIS are designed to protect depositors by guaranteeing the repayment of funds owed by depositors of banks and other member credit institutions in the event of bankruptcy. This paper uses the SYMBOL and the Monte Carlo simulation method to calculate the systemic risk of the Iranian banking network. For this purpose, first, the probability of default of banks, using their balance sheet information, is estimated independently, and then, with the entry of the interbank market, the probability of default of banks in the presence of the spread of effects between Banking is measured and by obtaining the distribution of banks' losses, in both cases, the amount of coverage of these losses by the Deposit Guarantee Fund is examined and the capital adequacy of the Deposit Guarantee Fund is evaluated. The sample includes 15 Iranian banks and the period of 1397. The results show that the target size of the Deposit Guarantee Fund, in cases without and despite interbank effects, covers 91.5% and 87.5% of the losses, respectively. Failure of one or more banks can lead to Banking crisis and the collapse of the entire banking system, and it is necessary for regulators to take measures to prevent possible banking crises.