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Author: Mr.Karl Friedrich Habermeier
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451847116
Category : Business & Economics
Languages : en
Pages : 0
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Book Description
This paper argues that securities transaction taxes "throw sand" not in the wheels, but into the engine of financial markets where the transformation of latent demands into realized transactions takes place. The paper considers the impact of transaction taxes on financial markets in the context of four questions. How important is trading? What causes price volatility? How are prices formed? How valuable is the volume of transactions? The paper concludes that transaction taxes or such equivalents as capital controls can have negative effects on price discovery, volatility, and liquidity and lead to a reduction in the informational efficiency of markets.
Author: Mr.Karl Friedrich Habermeier
Publisher: INTERNATIONAL MONETARY FUND
ISBN: 9781451847116
Category : Business & Economics
Languages : en
Pages : 0
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Book Description
This paper argues that securities transaction taxes "throw sand" not in the wheels, but into the engine of financial markets where the transformation of latent demands into realized transactions takes place. The paper considers the impact of transaction taxes on financial markets in the context of four questions. How important is trading? What causes price volatility? How are prices formed? How valuable is the volume of transactions? The paper concludes that transaction taxes or such equivalents as capital controls can have negative effects on price discovery, volatility, and liquidity and lead to a reduction in the informational efficiency of markets.
Author: Ms.Thornton Matheson
Publisher: International Monetary Fund
ISBN: 1455220981
Category : Business & Economics
Languages : en
Pages : 50
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Book Description
In reaction to the recent financial crisis, increased attention has recently been given to financial transaction taxes (FTTs) as a means of (1) raising revenue for a variety of possible purposes and/or (2) helping to curb financial market excesses. This paper reviews existing theory and evidence on the efficacy of an FTT in fulfilling those tasks, on its potential impact, and on key issues to be faced in designing taxes of this kind.
Author: Robert Pollin
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
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Book Description
This paper examines the viability of security transaction excise taxes (STETs) as one policy tool for promoting a more stable financial environment, specifically with respect to the U.S. economy. Contrary to a large recent critical literature, we show that a STET can be designed without creating large distortions between segments of the financial market. We also show that a modest STET for the U.S. - beginning with a 0.5 percent tax on equity trades and scaled appropriately for other financial instruments - would generate substantial new government revenues, on the order of $100 billion per year.
Author: Catalyst Institute
Publisher: Irwin Professional Publishing
ISBN:
Category : Business & Economics
Languages : en
Pages : 216
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Book Description
You'll gain an understanding of all sides of this public policy debate - implementation issues, global concerns, and more - that will help you to gage the soundness of current arguments for and against STTs and to come to your own conclusions about their effectiveness.
Author: Karl Habermeier
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Book Description
This paper argues that securities transaction taxes throw sand not in the wheels, but into the engine of financial markets where the transformation of latent demands into realized transactions takes place. The paper considers the impact of transaction taxes on financial markets in the context of four questions. How important is trading? What causes price volatility? How are prices formed? How valuable is the volume of transactions? The paper concludes that transaction taxes or such equivalents as capital controls can have negative effects on price discovery, volatility, and liquidity and lead to a reduction in the informational efficiency of markets.
Author: Andrew Wen-Chuan Lo
Publisher:
ISBN:
Category : Finance
Languages : en
Pages : 57
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Book Description
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The International Monetary Fund (IMF) presents the full text of an article entitled "Securities Transaction Taxes and Financial Markets," by Karl Habermeier and Andrei Kirilenko and published May 2001. The article discusses the impact of transaction taxes on financial markets in the context of the importance of trading, price volatility, the volume of transactions, and the formation of prices. Findings show that transaction taxes can have negative effects on price discovery, volatility, and liquidity.
Author: Mr.Parthasarathi Shome
Publisher: International Monetary Fund
ISBN: 1451849958
Category : Business & Economics
Languages : en
Pages : 21
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Book Description
Financial transactions taxes have recently gained attention as a possible means to influence the behavior of financial markets and to reduce destabilizing capital flows. One variation is a tax on all foreign currency conversions, often termed a “Tobin tax.” This paper suggests that these taxes would probably not produce the desired effects and would be difficult to design and implement. It is unclear that the possible advantages in reducing some short-term speculative trading would outweigh the possible disadvantages in impairing the efficiency of financial markets. From an administrative perspective, without a broad international consensus and application, these taxes are likely to be easily avoided.
Author: Mr.P. Bernd Spahn
Publisher: International Monetary Fund
ISBN: 1451847998
Category : Business & Economics
Languages : en
Pages : 62
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Book Description
Tobin has suggested that exchange rate volatility be controlled through a tax on international financial transactions. This analysis shows that the Tobin tax as a pure transaction tax is not viable. The tax would impair financial operations and create international liquidity problems. It is also unlikely to deter speculation. However, a possible alternative would be a two-tier rate structure—consisting of a low-rate transaction tax plus an exchange surcharge. The exchange rate could move freely within a “crawling” exchange rate band, but overshooting the band would trigger a tax on an “externality,” which is the discrepancy between the market exchange rate and the closest margin of the band. The scheme is inspired by the European Monetary System. However, exchange rates would be kept within the target range through a tax, not through interest policy or central bank sterilization and, eventually, the depletion of international reserves.
Author: Dhananjay Sahu
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Tapping into the quot;psychologyquot; of the market, speculators resort to quot;noise-tradingquot; rather trading on the basis of the real value of the stock and this behavior has the potential to distort the market microstructure as evidenced in most developed and developing financial markets. The popular international practice of curbing such quot;noise-tradingquot; has been the introduction of securities transaction tax on a broad range of financial transactions. In consonance with the international practice and the general philosophy that financial stability should be treated as public good, Indian policy makers have introduced securities transaction tax in October, 2004 despite divergent opinions on the effect of STT on financial markets. The objective of this paper is to examine the impact of STT on market volatility and liquidity in Indian stock market. The data comprises of eleven frequently traded equity instruments listed at National Stock Exchange, India and spans over a period of 2 years before and 2 years after the introduction of securities transaction tax. Owing to the heteroscedasticity behavior of time series data, ARCH family of model is used to study the impact. The results indicate that the introduction of securities transaction tax has had no impact on market volatility and also it does not distort the liquidity in Indian stock market. Further, the result also implies an interesting fact that the informational efficiency of the market is not affected by the introduction of STT.
