We use the introduction of a financial transaction tax (FTT) in France in 2012 to test competing theories on its impact. We find no support for the idea that an FTT improves market quality by affecting the composition of trading volume. Instead, our results are in line with the hypothesis that a...

Although secured transactions traditionally are regulated to protect transacting parties and to make the transactions themselves more efficient, the financial crisis has revealed that regulation should also protect the stability of the financial system. This raises numerous future challenges....