Unit 2: Ethics and Banking

Question 1

True or False: In the 1980s it was common to only think of companies as having responsibilities to shareholders.

Answer 1

True.
Economists like Milton Friedman argued
that the social responsibility of business was to increase profits for shareholders.

Question 2

True or false: The contemporary view of companies, including banks, is that they have a responsibility to all their stakeholders – customers, staff, shareholders, government, the broader community, the environment, suppliers, their industry peers and so on.

Answer 2

True.
The enormous implication for ethics is
therefore that taking an ethical perspective requires us to have a deep connection to what is important to those stakeholders. We have to understand their values, the norms they would
like us to uphold and the rules that they think are important.

Question 3

Why is ethics considered social?

Answer 3

Because we don’t live isolated lives. Ethics involves making decisions that are almost always likely to involve and affect other
people or the environment.

Question 4

What makes ethics complex?

Answer 4

There is no single source of truth and there’s not necessarily just one ‘right thing to do’.

Question 5

What are two common ethical positions?

Answer 5

1. Moral absolutism
2. Moral relativism

Question 6

What is does moral absolutism assert?

Answer 6

That there are certain universal moral principles by which all peoples’ actions may be judged.

Question 7

What is the challenge with moral absolutism?

Answer 7

There will always be strong disagreements about which moral principles are correct and which are incorrect. Consider thoughts on abortion and capital punishment.

Question 8

What does moral relativism assert?

Answer 8

There is no universal or absolute set of moral principles. “To each their own”, “When in Rome”, “Who am I to judge?”

Question 9

What are some ethical questions faced by banks today?

Answer 9

1. Do our products and services add value to society? Consider cheap investment home loans, offering FX trading to retail clients, refusing certain products to certain customer.s
2. What level of profitability is appropriate?
3. Should bankers draw ethical boundaries around the scope of their businesses e.g. should banks operate in countries that discriminate against LGBT or do business with manufacturers of military weapons?
4. How to be confidential and transparent?