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The Role of the Future in Law and Finance

The Role of the Future in Law and Finance AbstractThe success of a capitalist economy rests upon the ability of finance to sustain potentially infinite growth, based on funding today the output of tomorrow. Finance, however, needs rules. The aim of the law and finance scholarship is precisely to identify the best regulation of finance to support economic growth. Traditionally, law and finance is concerned with investor protection. This would be sufficient if the future were predictable. However, because the future is uncertain, the prices of financial assets are flawed and in the short run they may result in serious mistakes, if not widespread crises. Although these mistakes are corrected in the long run, significant harm may occur in the meantime. Financial law should therefore be concerned not only with investor protection, but also with mitigating the temporary excesses of markets in allowing or restricting access to finance. The challenge of this goal is to remedy market myopia without allowing policymakers to abuse the power of governments. However imperfect, prices remain the best instrument of discipline and growth in a market economy. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal des Économistes et des Études Humaines de Gruyter

The Role of the Future in Law and Finance

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Publisher
de Gruyter
Copyright
© 2017 Walter de Gruyter GmbH, Berlin/Boston
ISSN
2153-1552
eISSN
2153-1552
DOI
10.1515/jeeh-2017-0007
Publisher site
See Article on Publisher Site

Abstract

AbstractThe success of a capitalist economy rests upon the ability of finance to sustain potentially infinite growth, based on funding today the output of tomorrow. Finance, however, needs rules. The aim of the law and finance scholarship is precisely to identify the best regulation of finance to support economic growth. Traditionally, law and finance is concerned with investor protection. This would be sufficient if the future were predictable. However, because the future is uncertain, the prices of financial assets are flawed and in the short run they may result in serious mistakes, if not widespread crises. Although these mistakes are corrected in the long run, significant harm may occur in the meantime. Financial law should therefore be concerned not only with investor protection, but also with mitigating the temporary excesses of markets in allowing or restricting access to finance. The challenge of this goal is to remedy market myopia without allowing policymakers to abuse the power of governments. However imperfect, prices remain the best instrument of discipline and growth in a market economy.

Journal

Journal des Économistes et des Études Humainesde Gruyter

Published: Dec 14, 2017

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