Author :
Abstract
Global financial markets, while generating numerous tools that accelerate capital flows and encourage financial innovation, are also making the distinction between what is considered “legal” and what is considered “legitimate” increasingly debatable. This study examines financing instruments that, while legally valid, are questioned from ethical, social, and economic perspectives, focusing on legality and legitimacy. The study addresses highly leveraged derivatives, shadow banking activities, offshore financing structures, tax evasion strategies, speculative fund movements, and regulatory arbitrage practices. It is argued that while these instruments support capital accumulation and financial efficiency, they also increase financial vulnerabilities, deepen income inequality, and fuel crisis risks. This research is based on a conceptual and analytical framework; it comparatively evaluates the legal basis, ethical and social consequences of financing instruments through international literature, regulatory reports, and current examples. The findings indicate that the current regulatory framework is struggling to keep pace with the speed of financial innovation, paving the way for the proliferation of legally permissible but questionable practices. Consequently, the study emphasises the need to reassess financial regulations to encompass not only legal compliance but also ethical responsibility, societal benefit, and sustainability principles.
Keywords
Abstract
Global financial markets, while generating numerous tools that accelerate capital flows and encourage financial innovation, are also making the distinction between what is considered “legal” and what is considered “legitimate” increasingly debatable. This study examines financing instruments that, while legally valid, are questioned from ethical, social, and economic perspectives, focusing on legality and legitimacy. The study addresses highly leveraged derivatives, shadow banking activities, offshore financing structures, tax evasion strategies, speculative fund movements, and regulatory arbitrage practices. It is argued that while these instruments support capital accumulation and financial efficiency, they also increase financial vulnerabilities, deepen income inequality, and fuel crisis risks. This research is based on a conceptual and analytical framework; it comparatively evaluates the legal basis, ethical and social consequences of financing instruments through international literature, regulatory reports, and current examples. The findings indicate that the current regulatory framework is struggling to keep pace with the speed of financial innovation, paving the way for the proliferation of legally permissible but questionable practices. Consequently, the study emphasises the need to reassess financial regulations to encompass not only legal compliance but also ethical responsibility, societal benefit, and sustainability principles.
Keywords
Global financial markets, Controversial financing instruments, Shadow banking, Financial ethics, Regulatory arbitrage, Sustainability
