Has Dodd-Frank Affected Bank Expenses?
Journal of Regulatory Economics, Forthcoming
45 Pages Posted: 3 Sep 2016 Last revised: 24 Mar 2019
Date Written: March 14, 2019
This paper examines the potential effects of the Dodd-Frank Act of 2010 on banks’ noninterest expenses. Using data on U.S. bank holding companies from 1995 through 2016, we test whether noninterest expenses increase following the passage of the Dodd-Frank Act or in relation to the number of banking regulations implemented after Dodd-Frank. We analyze subsamples of banks above and below $10 billion in total assets and consider total noninterest expenses, salaries, non-salary expenses, and specific subcategories of non-salary expenses: legal, consulting, auditing, and data processing. Non-salary expenses for both large and small banks show a one-time increase after Dodd-Frank, while salary expenses tend to increase with regulations. The results indicate that total noninterest expenses for the banking system are higher on average by more than $50 billion per year compared to before the Dodd-Frank Act.
Keywords: Bank Expenses, Regulation, Federal Reserve, Dodd-Frank, Financial crisis
JEL Classification: E58, G21, G28
Suggested Citation: Suggested Citation