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Securities Transactions Taxes and Financial Crises

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  • Benoît Carmichael
  • Jean Armand Gnagne
  • Kevin Moran

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.

Suggested Citation

  • Benoît Carmichael & Jean Armand Gnagne & Kevin Moran, 2015. "Securities Transactions Taxes and Financial Crises," Cahiers de recherche 1515, CIRPEE.
    • Handle: RePEc:lvl:lacicr:1515
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    References listed on IDEAS

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    Cited by:

    1. Jean Armand Gnagne & Kevin Moran, 2018. "Monitoring Bank Failures in a Data-Rich Environment," Cahiers de recherche 1815, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.

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    More about this item

    Keywords

    Securities Transaction Tax; Tobin Tax; Regulation; Financial Crises;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation

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