Tobin-Tax and its Relevance for Financial Markets. Modelling a Scenario including the Transaction Tax in Financial Markets

Masterarbeit , 2017 , 39 Seiten , Note: 1,7

VWL - Finanzwissenschaft

After this brief introduction it becomes clear that the realization of a financial transaction tax would predominantly serve the goal of preventing future financial crises by reducing instability in financial markets (high volatility).

In the following thesis, the author will first set up a model displaying a financial market with two heterogeneous agents to explain to what extent their trading behaviours have an impact on the stability of the relevant market.

In a second step, the model will be extended to two relevant markets the agents can choose to trade in and the effects of an application of a transaction tax will be depicted. Due to the fact that the reaction of financial markets to a tax introduction depends on various factors the main goal of this work will be to test to what extent the market liquidity in combination with an imposed transaction tax has an impact on the price adjustment process across several periods. For this reason, the set-up model will be programmed in ‘mathematica’ where after the output will be interpreted. Furthermore, a possible influence of upcoming political events will be elucidated briefly before the results of the main question are stated and discussed. To represent a succinct perspective there will be a brief analysis about the odds of a tax introduction and a mentioning of possible further research.

Table of Contents

1. DEFINITION AND EXPLANATION OF THE TOBIN-TAX AND ITS RELEVANCE FOR FINANCIAL MARKETS

2. MODELLING A SCENARIO INCLUDING THE TRANSACTION TAX IN FINANCIAL MARKETS
2.1.1 INTRODUCTION OF THE MODEL INCLUDING TWO HETEROGENEOUS AGENTS
2.2. EXTENSION OFTHE BASIC MODEL TO TWO RELEVANT MARKETS
2.3. DYNAMICSOFTHE MODELWITHOUT A TRANSACTION TAX
2.3.1.lmplication and resulting Dynamics ofa Transaction Tax in Market 1
2.3.2.lmplication and resulting Dynamics ofa Transaction Tax in two relevant Markets
2.4. BRIEF Outline of Market Liquidity and Comparison of both Markets regarding their Liquidity
2.4.1. Market 1 showing a high Level of Market Liguidity before a Tax Imposition
2.4.2. Market 2 showing a low Level of Market Liguidity before a Tax Imposition
2.4.3. Comparison of both Markets after a Tax Imposition
2.4.4. The Enforcement ofa Financial Transaction Tax in Reality

3. RESULTS

4. CRITIQUE AND FURTHER RESEARCH

5. REFERENCES

6. APPENDIX

• Hochschule: Otto-Friedrich-Universität Bamberg
• Veranstaltung: Regulierung und Kontrolle von Finanzmärkten
• Note: 1,7
• Autor: David Kunze (Autor:in)
• Erscheinungsjahr: 2017
• Seiten: 39
• Katalognummer: V388831
• ISBN (eBook): 9783668628793
• ISBN (Buch): 9783668628809
• Sprache: Englisch
• Schlagworte: tobin-tax, relevance, financial, markets, modelling, scenario, transaction