Ethics in Banking
Is Ethical Banking is really ecological?
In my "Foundation Course" a course named ‘Ethics and Banking’ had been conducted by Dr. Bandana Saha at BIBM. I am writing the article with the inspiration of Dr. Bandana and I always remember her one of the valuable speech of the mentioned class i.e. "Without ethics a Banker can’t shine".
Ethics can be defined as a system of standards and measures scrutinizing the values, norms and rules underlying the individual and social relations on such moral grounds as correct and incorrect or decent and unscrupulous.
Performing the investment and saving functions by playing the role of a unifier and mediator in the society between parties proposing and demanding funds, banks, as a part of marketplace, mostly and certainly target the profitability and productivity principles, which requires them to run in strict compliance with certain professional and organizational ethics principles.
Departing from the objectives of growth of banking system, enhancement of banking service quality, finest use of resources, formation of a fair and honest competitive environment among banks, and avoidance of imbalanced competition, banks are required and expected to regulate their relations with each other and other organizations, and with their customers, shareholders and employees in accordance with these ethical principles.
Traditional banks deal with generally internal ethics, ethical banks add to internal concerns by applying external ethics.
Marcel Jeucken & Jan Jaap Bouma stated in their book Sustainable Banking: The Greening of Finance (1999):
Several times such energy efficient changes are not based on moral concern but on cost efficiency.
Peripheral or external ethics are concerned with the wider complications of banks actions. This type of ethics looks at the influences that their commercial practices, such as who they loan to or invest in, will have on society and the environment. In applying external or peripheral ethics, one looks at how the products of banks can be used unethically, for example how borrowers use the money that is lent out by the bank.
Banks are often reluctant to broaden the scope of their external ethical policies as the momentous nature of the alterations. However, by integrating ethics that account for societal costs in their practices, banks may expand their reputation.
Ethical banking is a moderately new sector and this relatively embryonic nature causes some problems. Another issue in this category is that of codes of conduct. Many ethical banks as well as conventional banks willingly join larger bodies that put forth certain regulations that according to the rules set by the body should be followed by members.
Such outside bodies could act as overarching institutions that could assurance a certain level of conformance with certain regulations. I shall write in details on ethical banking later where all issues will be described ostentatiously.
In my "Foundation Course" a course named ‘Ethics and Banking’ had been conducted by Dr. Bandana Saha at BIBM. I am writing the article with the inspiration of Dr. Bandana and I always remember her one of the valuable speech of the mentioned class i.e. "Without ethics a Banker can’t shine".
Ethics can be defined as a system of standards and measures scrutinizing the values, norms and rules underlying the individual and social relations on such moral grounds as correct and incorrect or decent and unscrupulous.
Performing the investment and saving functions by playing the role of a unifier and mediator in the society between parties proposing and demanding funds, banks, as a part of marketplace, mostly and certainly target the profitability and productivity principles, which requires them to run in strict compliance with certain professional and organizational ethics principles.
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| Ethics in Banking |
Departing from the objectives of growth of banking system, enhancement of banking service quality, finest use of resources, formation of a fair and honest competitive environment among banks, and avoidance of imbalanced competition, banks are required and expected to regulate their relations with each other and other organizations, and with their customers, shareholders and employees in accordance with these ethical principles.
Traditional banks deal with generally internal ethics, ethical banks add to internal concerns by applying external ethics.
Marcel Jeucken & Jan Jaap Bouma stated in their book Sustainable Banking: The Greening of Finance (1999):
Internal ethics are concerned with the well-being of employees, employee and customer satisfaction, benefits, wages, unionization, fair, sex and race representation, and the banks environmental standing. Environmentally the potential combined effect of banks switching to more environmentally friendly practices (i.e. less paper use, less electrical use, solar power, energy efficient light bulbs, more conscientious employee travel policies with concern to commuting and air travel) is huge. However, when compared with many other sectors of the economy banks do not incur the same burden of energy, water and paper use.
Several times such energy efficient changes are not based on moral concern but on cost efficiency.
Peripheral or external ethics are concerned with the wider complications of banks actions. This type of ethics looks at the influences that their commercial practices, such as who they loan to or invest in, will have on society and the environment. In applying external or peripheral ethics, one looks at how the products of banks can be used unethically, for example how borrowers use the money that is lent out by the bank.
Banks are often reluctant to broaden the scope of their external ethical policies as the momentous nature of the alterations. However, by integrating ethics that account for societal costs in their practices, banks may expand their reputation.
Ethical banking is a moderately new sector and this relatively embryonic nature causes some problems. Another issue in this category is that of codes of conduct. Many ethical banks as well as conventional banks willingly join larger bodies that put forth certain regulations that according to the rules set by the body should be followed by members.
Such outside bodies could act as overarching institutions that could assurance a certain level of conformance with certain regulations. I shall write in details on ethical banking later where all issues will be described ostentatiously.
Really its new thinking in banking sector
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