In this policy brief we review the theoretical argument for government-provided deposit insurance and compare it to the actual costs observed under the Federal Deposit Insurance Corporation (FDIC) in the United States. Contrary to theoretical arguments, deposit insurance is not free in practice....

The Diamond–Dybvig model is often cited as a theoretical justification for government-provided deposit insurance. Guaranteeing bank deposits removes the temptation for individual depositors to run on the bank and thereby precludes the need to ever use the deposit insurance. Hence, deposit...

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...