Abstract
This article examines the profitability of commercial banks in China, specifically focusing on the impact and processes of the deposit insurance system on banks` profitability. The consequences and underlying mechanisms are explored using a difference-in-difference model based on financial data from listed banks in China from 2007 to 2022. The findings indicate that implementing the deposit insurance regulation can promote commercial bank profitability. The positive effects are achieved by enhancing their risk-taking, liquidity, and growth ability. The findings is conducive to enhance the banking industry's growth and improve the financial services provided to the real economy.
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