Bank Ethics
Through the years, there have been a growing perception about being unethical and their image have gradually deteriorated. There is an urgency to work on improving their reputation in order to win people’s trust again. When this happens, it will be better for them and, of course, the society. It is true that ethical issues in banking and lending institutions influence everyone because even those who do not work in the field are affected. The ethical issues they could face will be discussed here that will help in building solutions for consumers.
The self-interest of bankers can make them greedy and selfish even if someone else will become affected. This type of mentality turns into an accumulation addiction, which means that the focus will move from long-term to short-term that concentrates on increasing profit (Federwisch, 2016). To better explain this, there are swaps that happen under this ethical issue. Every company points out the total income earned in the quarter and separates the cost. When this is done, they capitalize the asset and logs the cost as an expense that came up after some time, which leads to inflation. These swaps look like round-trip transactions that have no bearing other than to cause inflation revenue in a company.
There is an issue referred to as “Green Banking” that places a lot of major concerns on the environment. What the organization needs to do is to pay attention to their outcome if they are hurting the environment or not. It is believes that profit should not come from the environment problems of the world. This is the reason why finance organizations, organic food businesses related to farming, and emerging renewable enterprises, to companies that recycle and conserve nature (Goyal and Joshi, 2011).
When it comes to company demands, there could be a hindrance caused by their duties as professionals. If the system they have is faulty, this can lead to a behavior that is unethical. Take into consideration offering indexed annuities to the elderly, if the company is paying a large commission when the product sells, the salesperson may ignore the client’s needs in order to make a sale. The agent who is self-interested is now functioning only for that reward. Generally, organizations only get what they reward. They fail to make a realization that the structure of their rewards encourage dysfunctional behavior.
There is an ethical issue called “Lobbying” and due to the financial crisis regulators in a lot of countries, they have made an announcement to reform the industry of banking. A widespread concern emerged that the government has to protect the usable function of money transfer within the economy, which supports the own-account investment banking, which is also called ‘casino banking.’ (Central Finance Board, n.d.). It was in June 2010 when the treasury of the UK said that the creation of Independent Commission on Banking is handled by Sir John Vickers. This supported the retail banking form in investment banking in the year 2019, but proposals are still pending. …
