Analysis of Influence of Deposit Insurance System on Countryside Medium and Small Financial Institutions

he deposit insurance system plays important roles in protecting small depositors’ benefit and maintaining financial stability. However, deposit insurance also involves moral hazard and adverse selection. Thus, it is crucial to design the specific contents of deposit insurance system in a scientific and rational method. This paper proposed that the countryside medium and small financial institutions must be incorporated into the deposit insurance system and the corresponding premium rate shall be kept in a relatively low level.