Session 1 Flashcards
What is the objective of Ethics?
Always doing the right thing even when you do not have to.
How are our ethics formed?
Through our core values, which themselves come from culture, experience and conduct.
What are common core principles of ethics?
beneficence :do good,
nonmaleficence: do not harm,
autonomy: control by the individual,
justice and fairness.
Why is ethics important on finance?
There are various scandals because of unethical conduct.
The issue is that this sector will hurt the livelihood of large number of people even though they did not choose to be involved => looking at you banks.
Why is the banking sector different? And why does this affect its need to be more ethical?
Banks have asymmetry of knowledge, so they can abuse it against “vulnerable” clients.
They actually hold others savings, if they meddled with them it would leave people with no fruits of their hard work.
They can create systemic risk, as their actions can launch chain reactions on the market.
What are the consequences of banks being a very important sector?
The public opinion usually leans on distrust, as they fear they will fuck them up.
Govs want to regulate them as they can hurt their economies and create crisis. => The banks goals do not align with everyone’s prosperity
How can the banks align their interests and prevent new Scandals?
Create a more ethical working culture.
Develop regulation to prevent perverse intentions.
What are the five arguments for the inclusion of ethics in decision-making?
Sustainability
Build trust with the consumers & Suppliers
Create better leaders
Reputation
Ethics cover more than regulation
What are the PROs of “Sustainability” as an argument to include ethics on decision making?
ethics in finance is driven by the legacy one creates through transactions
⇒ contributing to keep the world for the kids
⇒ business can’t escape ethics and integrity
What are the Objections of “Sustainability” as an argument to include ethics on decision making?
In an anarchic world, unethical would be the only way to survive. (although we don’t live in the jungle.)
What are the PROs of “Trust-building” as an argument to include ethics on decision making?
Most businesses aims to create a close relationship with consumers:
an ethical approach personalizes things and turns abstract principles into tangible actions to which people can relate ⇒ Trust Rewards
What are the Objections of “Trust-Building” as an argument to include ethics on decision making?
The above does not work if managers don’t feel accountable towards the community and are behaving unethically (?) for their own interest
What are the PROs of “It creates better leaders” as an argument to include ethics on decision making?
Ethical leaders normally equate to better leaders.
=> Better leaders lead to better performance because it fosters stronger teams.
=> Workers are more loyal to an ethical leader. Especially important for unsupervised work.
What are the Objections of “It creates better Leaders” as an argument to include ethics on decision making?
Even if the manager or leader is ethical it does not mean that the team will follow suit.
What are the PROs of “Ethics covers more than regulation” as an argument to include ethics on decision making?
Ethics means that you will act on the correct manner even if there is a gap on the legislation.
Seeing regulation is slow and not 100% efficient, ethics will cover those spots.
Ethics includes regulation, regulation is the lowest common denominator.
