Business ethics in banking

Companies do have ethical responsibility and are not protected by limited liability from the consequences of their actions. A company's record and the preception of its ethics affect its reputation and ensure long term success or failure.The financial community has a history of placing moral considerations above legal or opportunistic expedients. But we are often exposed to moral dangers and the dangers of contamination are increasing. Deregulation and the technological revolution are sharpening ethical conflicts.Bankers' role is one of stewardship based on trust. We are trusted by those who ask us to look after their money and we have a duty to lend that money responsibly.Banking is about rewards reflecting real risks and ethical considerations form an important part of our risk-taking activities. The welfare of our borrowing customers, in good times and bad, is of major concern in any business proposition. Sometimes commercial considerations can be at odds where ethics and politics combine, for example, on the LDC debt question.We depend on people to run our business and to reflect our ethical standards. We have to let our people know what is expected of them and help them to avoid pressures and temptations.A bank's responsibility extends to Government, customers, shareholders, staff and the community. In the future, as we face increasingly complex and conflicting issues, our resolve and commitment to ethical behaviour will be tested.Mr Charles F Green, 58, was a Deputy Group Chief Executive of National Westminster Bank since 1 December 1986 and a Director since February 1982. Exercised oversight of UK Financial Services and Support Services, as well as shared in the Chief Executive's representational Sole.In July 1989, Mr. Green resigned from the National Westminster Bank.His outside commitments are largely Church based. Since 1980 a member of the Church of England General Synod, he is currently Vice Chairman of the Church's Board for Social Responsibility and is Chairman of its Industrial and Economic Affairs Committee and a Trustee of the Church Urban Fund.He is also Chairman of the Executive Committee of Business in the Community, Chairman of the CBI Overseas Committee and Treasurer of the Policy Studies Institute.     

Integrity, responsibility and affinity: three aspects of ethics in banking

Banking, in common with other areas of finance, is often considered an amoral field focused purely on risk and return. However, ethics does have an important role to play, both traditionally and as business and banking evolve. Based on a speech to a European Union conference on financing small and medium–sized enterprises (SMEs), this paper seeks to provide an overview of ethics in banking using three terms. Integrity is important to generate the trust necessary for any banking system to flourish, responsibility highlights contemporary banks' need to take into account the consequences of their lending policies, and affinity refers to a set of relatively novel ways in which depositors and borrowers can be brought closer together than they are in conventional western banking.     

Two case study scenarios in banking: a commentary on The Hutton Prize for Professional Ethics, 2004 and 2005

The ‘Hutton Prize for Professional Ethics’ of The Chartered Institute of Bankers in Scotland is awarded annually to the author of an essay that addresses most convincingly the question, ‘what do you now do?’ in response to an ethically sensitive, case‐study scenario. This paper makes available the Scenarios from 2004 and 2005, together with commentary thereon. Scenario 2004 stresses the importance of moral imagination and empathy. It addresses borrowing arrangements for a mother and daughter where illness has created past and continuing problems and there is the possibility that a wealthy relative will be made an unwitting guarantor. Scenario 2005 explores the boundaries inhibiting an opportunity for showing ‘mercy’ by one employee for another. Particular attention is paid to the difficulties that practising this ethical virtue could cause in a professional context, including tracing back to similar ambiguities discernible within foundational texts for Christian ethics.     

The CSR's influence on customer responses in Indian banking sector

In the face of growing attention to corporate social responsibility (CSR) activities in the marketplace, this paper seeks to demonstrate how corporate social responsibility (CSR) initiatives influence customer purchase intention in context of Indian retail banking. Further, the impact of awareness as a moderating variable between CSR and purchase intention has been examined. The conclusion drawn from this study have important implications for Indian banks as they suggest that building a socially responsible image might have a favorable effect on consumer purchase intention. Findings suggest that corporate ability has a strong effect on customer purchase intention while CSR activities were found to exert influence on customer purchase intention in cases where the customer was aware of such activities being conducted. This paper contributes to existing CSR literature by offering a deeper understanding into CSR dynamics and its effect on consumer purchase intention. Further, the study tests the level of consumer awareness of CSR activities in a real market situation (not artificial or simulated) which has not been done in previous studies.     

Anjan V. Thakor,The purpose of banking: transforming banking for stability and economic growth

Business Economics -     

Stand by me: Friends,relationship banking,and financial governance in Asia

While northeastern Asian economies have grown at a stellar rate over the past 4 decades, during the same period, bank officials and financial market participants have been charged with corruption, nepotism, and government meddling and have incurred high levels of non-performing loans. The close relationships between financiers and their clients, a part of Chinese society known as guanxi, has often been criticized as a key source of corruption in Northeast Asia finance. However, the complex nature of relationships in guanxi networks brings a good side to Asian finance in that reputational risk disciplines financiers, clients, and government officials. I delve into the personal side of Asian finance using the theoretical poles of transactional and relationship banking. Transactional banking is a top-down, hard-data impersonal form of financial contracting, while relationship banking is a bottom-up interpersonal form of banking that relies on softer data. I argue that relationship banking, which naturally fits into an Asian context, could engender a shift from bad behavior to good behavior to protect wealth, reputation, and friends. Contrary to conventional wisdom, guanxi may lead to better governance in banking and other areas of Asian finance as more information becomes available through numerous media outlets and as groups outside the banking sector (e.g., insurance companies, the press, auditors, and citizens) discipline bankers and their clients through ‘private monitoring.’     

Competitiveness, resources, and capabilities: empirical evidence from retail banking

This research aims to identify and measure bank employee perceptions of the determinants of competitiveness in terms of resources, skills, and capabilities within the retail banking sector. All the 40 branches of a leading Portuguese bank—the Caixa Geral de Depósitos—operating in two Portuguese districts were surveyed. Our results show that bank competitiveness differs according to performance evaluation, human resource (HR) planning, the system of incentives, and managerial motivation. They also demonstrate that human capital is a source of success in the business of banks, which relies heavily on stable and enduring relationships with customers. The study also provides recommendations for retail bank managers seeking to refine their HR strategies as a means of improving their competitiveness.     

Editorial introduction: Derrida,business, ethics

This special issue contains papers first presented at a conference that was held 14–16 May 2008 at the Centre for Philosophy and Political Economy at the University of Leicester. Each of the papers takes up ideas from the works of Jacques Derrida and seeks to apply these to questions of business, ethics and business ethics. The papers take up quite different parts of Derrida's works, from his work on the animal, narrative and story, the violence of codification and the limits of responsibility to the aporias of decision. As a whole, the papers offer a dangerous gift to business ethics, of which the stakes are here laid bare – if business ethics is to shrug off its philosophical immaturity and take seriously the work of major European thinkers such as Derrida, then many of its assumed categories, concepts and practices will be shown to shudder and tremble, as it becomes possible to demonstrate how they, one by one, unhinge themselves.     

Exit,voice, and ethics

Hirschman's (1970) exit, voice, and loyalty framework draws attention to both economic and political behavior as instruments for organizational change. The framework is simple but powerful; it has stimulated much cross-disciplinary analysis and debate. This paper extends this analysis by examining normative implications of Hirschman's basic premise: that exit and voice are primarily mechanisms for enhancing organizational (vs. individual) well-being. Michael Keeley is Professor of Management and Director of the Graduate School of Business at Loyola University of Chicago. His research interests involve normative organization theory, especially effectiveness theory. Major publications include A Social Contract Theory of Organizations.Jill W. Graham is an Assistant Professor of Management at Loyola University of Chicago. Her areas of research interest include principled organizational dissent, organizational citizenship behavior from a political perspective, organizational loyalty, and servant-leadership.     

Fetal protection: Law,ethics and corporate policy

Corporate fetal protection policies are designed to protect unborn children from exposure to harmful substances in the workplace. In recent years, a number of corporations have instituted fetal protection policies which excluded all fertile female employees from jobs which exposed them to hazardous substances. Critics argued that these policies discriminated against women, and several lawsuits were filed.The United States Supreme Court recently decided a case involving the fetal protection policy of Johnson Controls, Inc. This article will analyze the impact of the Supreme Court decision from a legal and ethical perspective. Practical guidelines for policies which protect the unborn and comply with the law will also be addressed.Ira Sprotzer, J. D., is an Associate Professor and Chairman of the Department of Business Policy and Environment at Rider College, Lawrenceville, N.J. Professor Sprotzer is a member of the New Jersey Bar and publishes research in the field of Employment Law.Ilene V. Goldberg, J. D., is an Assistant Professor in the Department of Business Policy and Environment at Rider College, Lawrenceville, N.J. Professor Goldberg is a member of the New Jersey and Pennsylvania Bars and publishes research on topics related to Health Law.     

Oil,debt, banking and the world recession

The threat of a major debt crisis is presently hanging over the international financial community like Damocles' sword. Behind the crisis lies the flood of petrodollars into the financial institutions of the industrial world since the mid 1970s and the consequent large-scale lending to “doubtful customers”. A simple solution to the problem is not in sight.     

Students,ethics and surveys

In a recent article in this Journal Grant and Broom reported on a survey which they conducted concerning student attitudes toward ethics. They suggest that while their findings are only preliminary, such surveys can help instructors and schools to determine what type of ethical training a person from a particular demographic background might need. Likewise they may very well help a student's future employer determine the ethics he or she has based on the type of institution he or she attended. However, it is my contention that there are a number of problems inherent in the process and the interpretation which Grant and Broom suggest. I discuss these problems herein. J. Whitman Hoff is Assistant Professor of Philosophy at Bentley College. She has been awarded a number of grants including participation in two NEH Summer Seminars For College Teachers. She has published in the areas of business ethics, aesthetics and sports history. In addition to business ethics, she is currently doing research in the area of children's rights and is working on a book, Philosophical Issues in the Stepfamily.     

Business,ethics and law

The comparative seriousness of business law and business ethics gives some business people the impression that there is nothing important in business ethics. The costly penalties of illegal conduct compared to the uncertain consequences of unethical conduct support a common illusion that business ethics is much less important than law for business people. To dispel the illusion I distinguish two perspectives from which we can view the relation of business and normative systems: the internal and external perspectives. I show that in one perspective, ethics is hardly less important than law, and in the other perspective it is more important, more fundamental than law. I conclude with a discussion of why business persons must place ethical and legal rules ahead of profits.Richard McCarty has been a lecturer in the philosophy department at East Carolina University in Greenville, N.C. since 1986. He has published articles primarily in aesthetics and ethics.     

Experiential ethics: A blueprint for personal and corporate ethics

There is a tendency to think of ethics as a universal body of principles governing human behavior. Richard R. Niebuhr challenges this universalist perspective by examining the development of human consciousness as an individual enterprise originating in immediate human experience. His conclusions lead us towards an understanding of conscience as likewise individual and experiential. It also enables us to identify a corporate consciousness or conscience which accounts for, yet prescinds, individual differences. In effect, Niebuhr's thinking in these matters provides us with a chart or blueprint for better ethical decision-making in business situations.Marist Father Patrick Primeaux teaches business ethics at Saint John's University, Jamaica, New York. He has a Ph.D. in Theology from Saint Michael's College of the University of Toronto and an M.B.A. from Southern Methodist University. In addition to business ethics, he is doing research and writing in the area of church management.