A Research On The Cause Of Formation And Prevention Mechanism Moral Hazard In Small And Medium-Sized Commercial Banks In China Under Deposit Insurance System

In order to further enhance the level of commercial banks in the background of new economic development,China has implemented a deposit insurance system on May 1,2015,which provides a solid credit base for the stable operation of commercial banks.However,based on the diversity of commercial banks,the implementation of this system provides a fairer competitive environment,and probably induce moral hazard problem in the small and medium commercial banks.On the one hand,Chinese small and medium-sized commercial banks and state-owned commercial banks compared to the lack of absolute advantage,are more likely to engage in high-risk business activities to achieve a rapid expansion of the purpose.On the other hand,the implementation time of China's current deposit insurance system is relatively short and in the implementation process there are many immature and one size fits all operational issues.Therefore,it is vital to study the incentive of moral hazard in small and medium-sized commercial banks and prevention mechanism.This paper first expounds the basic concept and theory of deposit insurance system and moral hazard and analyzes the moral hazard faced by depositors,insured banks,financial supervision departments and deposit insurance institutions from four perspectives.At the same time,through the marginal cost analysis,this paper introduces the formation mechanism and prevention method of moral hazard under the deposit insurance system,introduces the game tree and the payment matrix to explore the possibility of reducing the moral hazard,and compares the moral hazard in different deposit insurance modes,including hidden and explicit,single rate system and differential rate system.The result of this study is that the deposit insurance system with different rate system can reduce the moral hazard.Moreover,on the ground of the current situation of small and medium-sized commercial banks in China,this paper discusses the possibility of moral hazard caused by the operating costs,interbank competition and financial indicators of small and medium-sized commercial banks under the background of the operation of deposit insurance system.In this paper,the Ronn-Verma model based on the option theory is used to calculate the corresponding risk difference rate,and the insurance rate is between 0.0029 bps and 144.1393 bps.According to the empirical results of RV,a regression model based on the financial indicators of small and medium commercial banks is constructed,and 13 non-listed commercial banks in China are tested to obtain insurance rates between 2.92 bps and 68.60 bps.Eventually,the paper explains how the small and medium-sized commercial banks can prevent the moral hazard from the aspects of the system design and the environment construction,that is,with the pricing mode of the risk difference rate controlled within 0.01%-0.7%,make reasonable adjustments to the level of the rate in a timely manner in accordance with the relevant factors,and strengthen supervision and improve the exit mechanism of financial institutions and information disclosure system.