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    Financial transaction tax and market quality: Evidence from France†

    88448.pdf (1.230Mb)
    Access Status
    Open access
    Authors
    Parwada, J.
    Rui, Yixuan
    Shen, J.
    Date
    2022
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Parwada, J. and Rui, Y. and Shen, J. 2022. Financial transaction tax and market quality: Evidence from France†. International Review of Finance. 22 (1): pp. 90-113.
    Source Title
    International Review of Finance
    DOI
    10.1111/irfi.12342
    ISSN
    1369-412X
    Faculty
    Faculty of Business and Law
    School
    School of Accounting, Economics and Finance
    URI
    http://hdl.handle.net/20.500.11937/88626
    Collection
    • Curtin Research Publications
    Abstract

    The effectiveness of Financial Transaction Taxes (FTTs) for deterring speculative trading and improving market quality remains controversial. Studying the FTT imposed in 2012 on large-cap stocks traded on the Euronext Paris, we find that stocks subject to the FTT subsequently experience significantly decreased turnover and increased spreads relative to the untaxed peers. Further tests suggest that the FTT imposition induces investors to migrate their trades and results in less informativeness in the taxed stocks. Collectively our findings support the view that FTTs deter informed trades and reduce market quality.

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