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Financial Freedom and Socially Responsible Market Economy: An Analysis from Rawls’s Theory of Justice

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  • Daryaei , Abbas Ali

    (Imam Khomeini International University)

  • Haghighat , Hamid

    (Imam Khomeini International University)

Abstract

Using Rawls's theory of justice, this paper addresses the empirical question of whether the socially responsible market economy can help explain the current situation in financial freedom, as well as its recent variation across countries. Utilizing annual data from selected countries of Middle East, North Africa, Asia and Oceania, and static panel estimation techniques, we provide evidence which suggests that many Socially Responsible Market Economy (SRME) components are statistically significant determinants of Financial Freedom (FF). Our findings reveal that three factors of SRME, namely, organization of the market and competition, welfare regime and private property have a positive significant relationship with FF. Legislative bodies are advised to legislate impartial rules, through which they can develop the necessary grounds for financial liberalization and subsequent transparency of financial information in financial markets.

Suggested Citation

  • Daryaei , Abbas Ali & Haghighat , Hamid, 2017. "Financial Freedom and Socially Responsible Market Economy: An Analysis from Rawls’s Theory of Justice," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(3), pages 251-275, July.
    • Handle: RePEc:mbr:jmonec:v:12:y:2017:i:3:p:251-275
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    More about this item

    Keywords

    Financial Freedom; Socially Responsible Market Economy; Rawls’s Theory of Justice; Governments;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G19 - Financial Economics - - General Financial Markets - - - Other

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