Securities Transaction Taxes and Financial Markets

IMF Working Papers, May 1, 2001

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Securities Transaction Taxes and Financial Markets

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Bibliographic details

• Authors: Karl F Habermeier, Andrei A Kirilenko
• Published: May 1, 2001
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451847116.001

Authors and Publication

• By Karl F Habermeier, Andrei A Kirilenko
• May 1, 2001
• IMF Working Papers, Working Paper No. 2001/051
• Issue: 051
• Volume: 2001
• Pages: 30
• DOI: https://doi.org/10.5089/9781451847116.001
• Stock No: WPIEA0512001
• ISBN: 9781451847116
• ISSN: 1018-5941

Research question and analytical framework

• The paper examines the impact of securities transaction taxes on financial markets through four questions:
  • How important is trading?
  • What causes price volatility?
  • How are prices formed?
  • How valuable is the volume of transactions?

Key findings

• Securities transaction taxes "throw sand" not in the wheels, but into the engine of financial markets, disrupting the transformation of latent demands into realized transactions.
• Transaction taxes, or equivalents such as capital controls, can have negative effects on:
  • Price discovery
  • Volatility
  • Liquidity
• These measures can lead to a reduction in the informational efficiency of markets.

Subjects and keywords

• Subject: Asset prices, Balance of payments, Capital controls, Financial institutions, Options, Prices, Stocks, Taxes, Transaction tax
• Keywords: Asset prices, capital controls, derivative transaction, equity trading, informational efficiency, market liquidity, market microstructure study, market participant, North America, Options, price discovery, round-trip transaction, securities transaction tax, securities transaction taxes, Stocks, transaction price volatility, Transaction tax, transaction volume, WP

Author/Publisher disclaimer

• This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

IMF Working Paper: "Securities Transaction Taxes and Financial Markets", Working Paper No. 2001/051.

Content in this bundle

• Securities Transaction Taxes and Financial Markets - WP/01/51
  • Securities Transaction Taxes and Financial Markets - WP/01/51 (Markdown version)
  • Securities Transaction Taxes and Financial Markets - WP/01/51 (PDF)