Dodd-Frank and Unlimited Deposit Insurance

15 Pages Posted: 4 Sep 2021

Date Written: August 1, 2021

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 (Dodd-Frank). 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 good complement to FDIC insurance during recessionary times.

Keywords: deposit insurance, Federal Deposit Insurance Corporation, Dodd-Frank Wall Street Reform and Consumer Protection Act

JEL Classification: G01, G21, G28

Suggested Citation

Stone, Anna-Leigh, Dodd-Frank and Unlimited Deposit Insurance (August 1, 2021). Available at SSRN: https://ssrn.com/abstract=3905573 or http://dx.doi.org/10.2139/ssrn.3905573

Anna-Leigh Stone (Contact Author)

Samford University ( email )

800 Lakeshore Drive
Birmingham, AL 35229
United States

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