Socially Useless? The Crucial Contribution of Finance to Economic Life

Authors

Philip Booth, St. Mary’s UniversityFollow
Diego Zuluaga, Institute of Economic AffairsFollow

JEL Code

D6, D14, D61, E44, H11, G21, G22, G23

Abstract

The value of financial markets is under-appreciated. Financial markets perform fundamental functions which are vital in reducing transactions costs in the economy for businesses and households. Without well-functioning financial markets, business would find if much more costly to raise capital and ordinary households would find retirement, protection against everyday risks and day-to-day transactions impossible. Those who criticise financial markets ignore the breadth of their functions and focus on a narrow range of activities. However, even activities such as trading, speculation and so on have social value. The evidence that they cause social problems appears more circumstantial when put under closer scrutiny.

Recommended Citation

Booth, Philip and Zuluaga, Diego (2020) "Socially Useless? The Crucial Contribution of Finance to Economic Life," Journal of New Finance: Vol. 1: No. 2, Article 1.
DOI: 10.46671/2521-2486.1004
Available at: https://jnf.ufm.edu/journal/vol1/iss2/1

Submission Date

June 2020

Approval Date

9-1-2020

Publication Date

9-15-2020