Deposit insurance can affect how risky banks behave. When deposit insurance is generous, banks take more risks, which can lead to instability. However, during a crisis, having deposit insurance can actually make banks safer. Good bank supervision can help reduce the risks associated with deposit insurance. Overall, deposit insurance has a negative impact on bank stability in normal times, but can be beneficial during turbulent times. It's important to have the right incentives in place to ensure that the financial system stays stable.