Journal of Financial Services Research

, Volume 47, Issue 2, pp 177–202

Politically Motivated Taxes in Financial Markets: The Case of the French Financial Transaction Tax

  • Stephan Meyer
  • Martin Wagener
  • Christof Weinhardt

DOI: 10.1007/s10693-013-0189-8

Cite this article as:
Meyer, S., Wagener, M. & Weinhardt, C. J Financ Serv Res (2015) 47: 177. doi:10.1007/s10693-013-0189-8


This paper studies the effects of the introduction of the French financial transaction tax in August 2012. With the tax, the French government aims to generate revenues for financing the burdens of the financial crisis and to curb short-term trading. We find that the financial transaction tax has a strong impact on trading intensity and liquidity supplier behavior. Trading volume decreases by about one-fifth compared to the pre-event period. While liquidity suppliers reduce the number of quote and price updates and post less volume at best prices, there is no evidence that spreads increase. Our results suggest that policy makers need to be well aware of the links between tax design and investor behavior, before introducing a financial transaction tax.


Financial Transaction tax Trading intensity Market liquidity 

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Stephan Meyer
    • 1
  • Martin Wagener
    • 2
  • Christof Weinhardt
    • 3
  1. 1.Research Group Financial Market InnovationKarlsruhe Institute of TechnologyKarlsruheGermany
  2. 2.Boerse Stuttgart Holding GmbHStuttgartGermany
  3. 3.Institute of Information Systems and MarketingKarlsruhe Institute of TechnologyKarlsruheGermany

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