Financial Derivative Instruments and Social Ethics

Recent finance literature attributes the development of derivative instruments (interest rate futures, stock index futures) to (1) technological advances, and (2) improved mathematical models for predicting option prices. This paper explores the role of social ethics in the acceptance of financial d...

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Bibliographic Details
Published in:Journal of business ethics 1994-03, Vol.13 (3), p.197-204
Main Authors: Raines, J. Patrick, Leathers, Charles G.
Format: Article
Language:English
Subjects:
Bucket shops
Business ethics
Cash
Commodity futures
Derivative contracts
Derivatives
Ethics
Futures contracts
Gambling
History
Investment policy
Market prices
Profits
Securities markets
Social ethics
Social investing
Social responsibility
Stock exchanges
Stock futures
Stock market indices
Stock prices
Studies
Values
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Summary:Recent finance literature attributes the development of derivative instruments (interest rate futures, stock index futures) to (1) technological advances, and (2) improved mathematical models for predicting option prices. This paper explores the role of social ethics in the acceptance of financial derivatives. The relationship between utilitarian ethical principles and the demise of turn-of-the-century bucket shops is contrasted with modern tolerance of financial derivatives based upon libertarian ethical precepts. Our conclusion is that a change in social ethics also facilitated the growth in trading in modern financial derivatives.
ISSN:0167-4544
1573-0697
DOI:10.1007/BF02074819