Abstract

https://ssrn.com/abstract=2449027
 


 



Bank Income and Adjustment to Debit Card Interchange Regulation


Benjamin S. Kay


U.S. Treasury Office of Financial Research

Mark D. Manuszak


Board of Governors of the Federal Reserve System

Cindy M. Vojtech


Federal Reserve Board

July 22, 2016


Abstract:     
The Durbin Amendment to the Dodd–Frank Act yielded regulations that cap debit card interchange fees for banks with over $10 billion in assets. Using a difference-in-differences identification strategy, we document and quantify the resulting decline in interchange income for treated banks. We further find that treated banks offset more than 90% of the lost interchange income through increases in deposit fees for account holders. These results are robust when limiting the sample to banks near the asset threshold or using control banks with low direct competition with treated banks. Treated banks neither reduced costs nor strategically avoided the $10 billion threshold.

Number of Pages in PDF File: 49

Keywords: Durbin Amendment, Debit Cards, Dodd-Frank, Bank Competition, Retail Banking

JEL Classification: G21, G23, G28, L51


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Date posted: June 13, 2014 ; Last revised: November 15, 2016

Suggested Citation

Kay, Benjamin S. and Manuszak, Mark D. and Vojtech, Cindy M., Bank Income and Adjustment to Debit Card Interchange Regulation (July 22, 2016). Available at SSRN: https://ssrn.com/abstract=2449027 or http://dx.doi.org/10.2139/ssrn.2449027

Contact Information

Benjamin S. Kay (Contact Author)
U.S. Treasury Office of Financial Research ( email )
717 14th Street, NW
Washington DC, DC 20005
United States
202-927-8149 (Phone)

Mark D. Manuszak
Board of Governors of the Federal Reserve System ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Cindy M. Vojtech
Federal Reserve Board ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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