Securities Transactions Taxes and Financial Crises

CRREP working paper 2015-06

17 Pages Posted: 30 Mar 2018 Last revised: 16 Jul 2018

See all articles by Benoit Carmichael

Benoit Carmichael

Université Laval

Jean-Armand Gnagne

Université Laval - Département d'Économique

Kevin Moran

Laval University - Department of Economics

Date Written: June 1, 2015

Abstract

This paper assesses the impact that a widely-based Securities Transaction Tax (STT) could have on the likelihood of systemic financial crises. We apply the methodology developed by Demirgüç-Kunt and Detragiache (1998) [IMF Staff Papers 45 (1)] to a panel dataset of 34 OECD countries for the sample 1973–2012, using a measure of a country’s average bid-ask spread in financial markets as a proxy for the likely effect of a STT on transactions costs. Our results indicate that the establishment of a STT could sizeably increase the risk of financial crises.

Keywords: Securities Transaction Tax, Tobin Tax, Regulation, Financial Crises

JEL Classification: E13, G15, G17

Suggested Citation

Carmichael, Benoit and Gnagne, Jean-Armand and Moran, Kevin, Securities Transactions Taxes and Financial Crises (June 1, 2015). CRREP working paper 2015-06, Available at SSRN: https://ssrn.com/abstract=3149023 or http://dx.doi.org/10.2139/ssrn.3149023

Benoit Carmichael (Contact Author)

Université Laval ( email )

Quebec G1K 7P4
Canada

Jean-Armand Gnagne

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

Kevin Moran

Laval University - Department of Economics ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

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