Small And Medium-sized Commercial Banks In The Deposit Insurance System, Moral Hazard Study

At present, the Chinese government is preparing to introduce the deposit insurance system. This system will provide a fair environment for small-medium commercial banks, but it may also induce the profit-push small-medium commercial banks to engage in high-risk operations, and then moral hazard happens to a certain extent. The moral hazard in the deposit insurance system weakens its effectiveness in the stability of banking systems. Therefore, at the beginning of the establishment, we must find the ways to control the moral hazard from small-medium commercial banks.This paper analyzed the moral hazard from small-medium commercial banks in the general level. Then based on the analysis of the moral hazard from small-medium commercial banks in the United States and Japan under their deposit insurance systems, I drew a conclusion about Countermeasures against moral hazard including risk-based premiums and insurance levels.Finally, in view of the practical conditions of our country and our small-medium commercial banks, I made some Countermeasures against moral hazard, not only make a rational design of the deposit insurance itself, but also improve the supporting systems, including risk rating mechanism, market withdrawal mechanism and financial supervisory, etc.