Abstract: Removing the implicit government guarantee will be a policy priority in the future, which will trigger the expectation of withdrawal of implicit guarantees and lead to the repricing of default risk of financial institutions. In the situation of financial institutions asset value random movement, under discrete time and continuous time implicit guarantee the article depicts the rule of the dynamic random movement of the total asset value of financial institutions, and within the framework of the structured model constructs default risk model considering the government's recessive guarantee, in the process of government's recessive guarantee quit measures default probability and expected loss of different risk state financial institutions. The research shows that:(1) with the gradual withdrawal of implicit government guarantee, the probability of default of financial institutions increases gradually and converges to the situation of complete non-guarantee, but the expected loss climbs up and then declines. (2) the higher the volatility of asset value and the leverage ratio of financial institutions, the greater the default probability and expected loss in the process of the withdrawal of implicit government guarantee. Based on the above research conclusions, policy suggestions are put forward to prevent systemic risks.

Key words: implicit government guarantees, default risk measure, risk measurement, financial institutions