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Ethics in Financial Markets - Essay Example

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In the paper “Ethics In Financial Markets” the author analyzes the theory of rational maximization that stipulates that one has an inner desire to gain as much as it can for himself as it can get. This theory has always been applied in the financial markets with disastrous effect…
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Ethics in Financial Markets
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Download file to see previous pages Futures have a tendency to goad traders to borrow money so as to purchase the commodity making the deal to go sour should the price of the commodity dip, hence has a major impact on the  stocks and the overall economy as a whole. Another form of the financial market is the Hedge fund.  Hedge funds have over the years become popular due to the high returns it offers to the high end investor.  Hedge funds do invest heavily in the futures and some analysts have argued that they help check the volatility of the stock market and in extension the US economy. Hedge funds though are being blamed for the 2009 recession. Financial markets therefore do involve the financial institutions that are the banks, insurance companies, stock brokers and other closely related institutions.
 Ethics is perceived as a set of societal standards of conduct and moral judgment that encompasses the norms of a given community. Ethics are a personal set of values used by an individual, a group or a profession;   so as to guide them in their action and help them fulfill or carry out their obligation. Its subjective rather that objective and its relative to our perception of reality  dependent on circumstances and life  experiences of the individual or group, thus making it a continuously evolving  code of conduct. It addresses issues pertaining to morality, i.e. good and bad; right or wrong etc.
 Capitalism has been accused to be Darwinian in nature due to the market volatility that is brought by competition and the natural forces of demand and supply. ...
Its subjective rather that objective and its relative to our perception of reality dependent on circumstances and life experiences of the individual or group, thus making it a continuously evolving code of conduct. It addresses issues pertaining to morality, i.e. good and bad; right or wrong etc.
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Financial markets ride on the premise of free market where the market is left to regulate and correct itself based on the principle of demand and supply enhanced through competition. The cost of the goods and services plus the overall state of the market is determined through the action of consumers and suppliers. Capitalism has been accused to be Darwinian in nature due to the market volatility that is brought by competition and the natural forces of demand and supply. Companies that are fit do survive while those that are unfit collapse especially during a recession. During recession bad debts is wiped out of the market leaving those who remain the task of rebuilding the market making the process to be cyclic and this is how market correction occurs. Competitive markets has made companies to do everything in their power so as to maximize profits by engaging in monopolistic practices, offering minimum wages and commercialization of everything making capitalism to be amoral as it prizes the self above others and the natural checks and balance that capitalist have been advocating for in most cases than not has always not emerged. Capitalism is generally volatile thus fails from time to time and the correction mechanism has proven to be wanting during financial crisis prompting governments to artificial correct the markets.
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