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Dodd-Frank and unlimited deposit insurance

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  • Stone, Anna-Leigh

Abstract

This paper is the first to examine the unlimited deposit insurance on noninterest-bearing transaction accounts (NIBTAs) provided by Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. During Dodd-Frank, banks had a smaller ratio of NIBTAs compared to later periods without the unlimited insurance but have larger deposit flows in NIBTAs over the $250,000 FDIC limit. The results suggest that depositors took advantage of the unlimited insurance, but that banks were not harmed by drawdowns when the insurance expired. Furthermore, the results suggest that emergency deposit insurance might be a complement to FDIC insurance during recessionary times.

Suggested Citation

  • Stone, Anna-Leigh, 2022. "Dodd-Frank and unlimited deposit insurance," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000617
    DOI: 10.1016/j.frl.2022.102739
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    References listed on IDEAS

    as
    1. Lambert, Claudia & Noth, Felix & Schüwer, Ulrich, 2017. "How do insured deposits affect bank risk? Evidence from the 2008 Emergency Economic Stabilization Act," Journal of Financial Intermediation, Elsevier, vol. 29(C), pages 81-102.
    2. Allen N. Berger & Martien Lamers & Raluca Roman & Koen Schoors, 2020. "Unexpected Effects of Bank Bailouts: Depositors Need Not Apply and Need Not Run," Working Papers 21-10, Federal Reserve Bank of Philadelphia.
    3. Stone, Anna-Leigh, 2021. "Double the insurance, double the funds?," Journal of Banking & Finance, Elsevier, vol. 133(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Deposit insurance; Regulation; Federal Deposit Insurance Corporation; Dodd-Frank Wall Street Reform and Consumer Protection Act;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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