Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 356: Taxing Emerging Stock Markets: A Beneficial Policy? Evidence from the Stockholm Stock Exchange, 1907-1939.

Daniel Waldenström ()
Additional contact information
Daniel Waldenström: Dept. of Economics, Stockholm School of Economics, Postal: P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: The question of whether financial markets should be taxed or not has been extensively debated. In this study, the gradual rise in public taxation of the Stockholm Stock Exchange during the first half of the 20th century is examined and evaluated. Our empirical findings focusing on trading volume and volatility show that transaction taxes caused substantial crowding out of trading activity and led to lower asset prices. Hence, some support is given to the proponents of a more cautious financial market taxation.

Keywords: Stock market; financial regulation; taxation; financial history

JEL-codes: G18; H25; N24; N44

28 pages, February 3, 2000

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