The Impact of the Security Transaction Taxes on Stock Prices and Stock Liquidity; Evidence from the NYSE

Author

Vedika Agarwal, Claremont McKenna CollegeFollow

Graduation Year

Spring 2013

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Eric Hughson

Rights Information

© 2013 Vedika Agarwal

Abstract

Security Transaction taxes have been in place in many countries for many years now. Yet we do not fully know how these taxes effect prices, volumes, bid-ask spreads and volatility and in turn if they are good for the economy or not. This paper is an attempt to understand how security transaction taxes decrease volume of trading, decrease prices of stocks and increase bid-ask spreads. It analyses the effect the STTs implemented by the state and federal government in New York on June 1^st 1905 and December 1^st 1914 respectively, had on the stocks of the New York Stock Exchange. These results will help us analyze whether future implementations of STTs will harm or benefit the market.

Recommended Citation

Agarwal, Vedika, "The Impact of the Security Transaction Taxes on Stock Prices and Stock Liquidity; Evidence from the NYSE" (2013). CMC Senior Theses. 651.
https://scholarship.claremont.edu/cmc_theses/651