Tax measures and household financial behaviour: Evidence from France

The aim of the paper is to examine how tax measures on financial assets have had an impact on the investment behaviour of French households. Using an ARDL approach on quarterly data from 2001 to 2014, the financial investment behaviour and the effect of tax measures of each financial asset are estimated. Income has a positive influence on the invested amount, and inflation has a negative influence. Financial wealth and interest rates have different impacts on the invested amount according to the individual financial asset. Our results indicate that tax measures have a significant impact on investment behaviour. In particular, results show a spillover effect from tax measures and asymmetric behaviour. These findings confirm that households have non-standard preferences, since results could be explained by a liquidity preference and a loss aversion effect. The results have implications for asset managers and policymakers.