Abstract

Since the financial crisis of 2008, the financial market has become synonymous with plunder and greed. The unsatisfactory and hostility of the public for the financial system keep growing. The wave of criticism, which the “Occupy Wall Street Protest” is the upsurge, has triggered the widespread rethink of the relationship between financial development and social justice. The traditional theory of finance and financial law is limited by the paradigm of balancing financial security and financial efficiency, which does not pay sufficient attention to the concept of financial justice, let alone the approach to it. With the booming of financial justice, the fairness in financial activities and the equity in financial resource distribution have been increasingly concerned.

Because of the profound theoretical foundation, it is not by accident that the idea of financial justice flourishes. With the continuous development of the theory of financial functions, the interpretation of financial functions has expanded from the basic functions in the purely economic aspect to the derivative functions such as income distribution in a social aspect. After 1990s, financial development theory has evolved from the relationship between financial development and economic growth to the relationship between financial development and social justice. Scholars addressed that the financial market has the ability and responsibility to diminish the inequality and maximize the overall social welfare. Meanwhile, the financial ethics, which is originated from the justice doctrines and economic justice theory, has taken financial justice as the core value in the financial market. Furthermore, from the perspective of finance, financial justice and financial efficiency are not radically opposite. Emphasizing financial justice does not mean the sacrifice of financial efficiency, but to some extent, can enhance financial efficiency. Therefore, even though the financial market is essentially a profit-driven game, but that does not prevent us from making the mammonish financial market becoming humanistic and contributing to a better society.

The concept of financial justice includes three dimensions, namely equal access to financial market, fair conduct of financial transactions and equitable share of financial welfare. The first dimension is based on equal opportunity, which requires all kinds of people and entities are entitled with the same opportunities and eligibility to participate in the activities of the financial market. People who demand for financial services are able to make without exclusion and discrimination and entities can provide financial service without unreasonable control and barriers. The second dimension is based on a fair process, which means financial transactions are conducted in equal statues, reasonable price, equitable rights and obligations and fair market rules. The third dimension is based on the equitable result, that is, to adjust the distribution of individual well-being to make everyone can benefit from the financial system, and improve the financial welfare of society as a whole.

The putting forward of the idea of financial justice is setting up a goal, which has a variety of way to reach. However, the Market Approach, which relies on the market mechanism to adjust spontaneously, has the drawbacks of market failures. The Morality Approach, which anchors hope on market players' moral consciousness and self-declines, lacks of rigid restriction to moral hazards. The Policy Approach, which uses the regulatory policies to intervene the operating of financial system, does not have the stability and legitimacy. So the Legal Approach, which use the legal institutions to regulate the financial system under the rule of law, is the optimal path to achieve the goal of financial justice. The Legal Approach to financial justice must be founded on the understanding of the interaction between law and finance. There are four key factors affect the financial activities and distribution of financial resources, which are capability, financial structure, market conduct and legal institution should be addressed. The legal institutions can adjust the capability, the market conduct and financial structure through various methods, such as empowerment, constraint, incentive and regulation. Thus, the essential of the Legal Approach is to comprehensively use the four methods to carry out the legal system design and through the implementation of the better legal institutions to fulfill the financial justice.

In abroad, both developed and developing countries have impressive practice on the legal approach to financial justice. For the emerging markets such as India, South Africa and Brazil which facing the main task of poverty reduction and development, they focus on the financial inclusion as the major goal and have passed laws to regulate the micro-lending, mobile money, correspondent banking and direct credit in order to make the more equal access to finance and share of financial welfare. For the mature financial markets such as the United States which has a well developed financial system, the main task is to maintain the well performance of the financial system. The United States has passed a series of acts to perfect the financial conduct and protect the financial consumers. For China which in a emerging and transitional period, financial inclusion and financial consumer protection are the dual tasks in present. Although a bunch of institutional responses have been made, there are still a lot of problems such as the low level of norms, the imbalance of objectives of financial justice, the ignorance of capabilities and overrely on the government intervention, etc.

In these backgrounds, it is important for China to follow the fundamental principle of the legal approach to financial justice, draw lessons from the legislation effort of foreign countries, improve the legal system of Chinese financial market in order to explore the specific path to achieve the financial justice. Firstly, the rule of law should be applied in the financial market and the legal system needs to be improved, which means to take financial justice as the principle and core value of financial law, to supplement the justice-oriented legal institutions, to reduce the flooding department rules and to apply diversity legal regulative methods. Secondly, it is urgent to make laws to empower the vulnerable communities, which means to build and improve capabilities, to confirm the legal statues of self help groups and to protect the entitlement and rights of vulnerable market participants. Thirdly, the government intervention needs to be regulated in order to optimize the financial structure. Specifically, the financial law ought to adjust the administrative control on financial market, establish market-oriented financial institution entry and exit system, promote market-oriented interest rate formation mechanism, encourage financial innovation; moderate regulatory intervention, eliminate monopoly on financial market. Finally, the behavior of market participants can be better restricted and guided to follow the fairness rule through legislation and law enforcement. In this regard, we can strengthen the financial conduct supervision on one hand, and promote the legislation of the social responsibility of financial institutions and make the moral requirement to legal obligations on the other hand.

Key words: Financial Justice; Legal Institution; Capability; Financial Structure; Market Conduct