Chapter: ethics towards the customer’s? Alternatively, ethics towards





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Banking Sector

and Joshiin (2011) suggested that people are aware most of the issues
concerning our environmental and hazardous effects of factories and
manufacturing industries. Researchers found that an organizations need to adopt
sustainable and feasible advantage by creating ecofriendly products, which does
not harm environment and our society. Banks can show their good intention
towards society and environment by giving loans to those organizations who
wants to create ecofriendly products, or work as ethical or socially
responsible or wants to help society as non-profit organizations or who have
good intentions towards society. However, it could affect the economic
development and industrial growth but our environment and society does not
afford this development at the cost of the environment depletion.

(1989) have discussed about corporate ethical responsibility in banking or
business perspective however corporations do have some responsibility towards
society means work as an ethical organization. A company’s status and their
works recorded and observe their ethical work, it can affect companies image
and it can make sure that their businesses success or failure because it
depends on their work nature. However, all financial corporations have some bad
history of placing their interest against legal methods. Sometimes companies
exposed to their corruption, and it affects their image and their business.

(2014) wants to describe the importance of ethics in business and relating it
with the law. According to author, financial intermediaries must preserve to
instructions of regulation, industry values and perform morally. In his
research they have describe the questions for example what do you think why
financial institutions needs to work on ethical standards or needs transparency
in their institution?  He also asked, why
do we need to measure ethics in businesses or ethics towards the customer’s? Alternatively,
ethics towards employer or employee and the society, he also tries to look
financial service aspects on ethical services towards stakeholders. Their
research covers ethical values in financial industries and stakeholders view on
current performance as well as tendencies.

(2002) gives an introduction to the concept of what is frequently describing as
“integrity, responsibility and affinity” these are three aspects of ethics in
banking and finance. Banking, is common with other areas of financing it is
often measured an unethical field focused purely on risk and return. However,
ethics does have a vital role to play both traditional businesses and banking
progress. Based on a speech to a European Union conference on financing small
and medium–sized enterprises (SMEs), their research is to provide an overview
of ethics in banking using three terms.

(2003) describing essentials of economical financial crisis, certain period of
time, specifically of banks, and the weakness of moral values in design and
selling of complex monetary products, decision making process is short term
perspective of firms. An ideal name of ethical bank is financial facilities. In
his context, demands are increasing of transparency, sustainability and
corporate social responsibility.

(2012) aim of his research is to examine the public framework of the baking
industry and defining the qualities of CSR and moral values of ethical banking.
Authors display his research result on ethical mindsets of banking
employees.  Purpose of financial
institutions and banks is built on market values, they are operates by the
funding of others. Lack of ethical standards revealed on the time of financial
crisis occurs. In commercial banking, public beliefs changed because of crisis.
An ethical principle needs to be applied because these crises increased the
force to apply, and that indicate the proper supplement for financial rule.
According to his research, he stated that this paper work for enthusiasm for
society and economical values and he stated that it is possible to generate
profit without hurting social and economic values.

(2013) investigates how the ethical banking sector embedded in the financial
services industry and draws out political-economic dynamics that facilitate as
well as hinder the development of the sector. To this end, the thesis develops
a conceptual framework that draws on literatures on industrial districts and
embeddedness. The thesis also models and analyses the ethical banking network
using social network analysis, previously author develops an understanding of
ethical banks business models and how the sector organized within the banking
industry. Data on the banks relationships with other organizations collected
through questionnaires and interviews had conducted with respondent firms to
explore ethical banking as a sector from the perspective of ethical banks
themselves. In addition, company, industry and legislative publications analyzed
to add context and validate findings.

(2011) is defining the role of the private sector and financial institutions in
particular, and how it is an important role to create a world, which is truly
sustainable. Many organizations are working in which non-governmental
organizations (NGOs), ethical depositors, consumers, rational, leading and
international businesses are working to formulate or create a triple bottom
line of a reality which is (profit, people and planet). Authors paper is an
introduction of an idea which is frequently described as “moral, social,
environmental, solidarity or alternatives etc.” banking and finance. The commercial
banking made values of mainstream poorly developed at their core business in
which they specifically characterized by values focused and performs. His
research gives an overview of this field where he show modern world pioneers
how they put themselves as historical context. Author gives some examples of bank
who works as an ethical bank, which has ethical point of view and have high
hope for ethical and sustainable world.


and Joshi (2011) defining the ethical issues in banking industry which can
affect banks image and trust which can be fluctuated by the unethical behavior
of banks or their activities. It consists of three parts in first part there is
a historical background of banking industry. In the second part, authors
explain the importance of bank and their nature of work, how it is associated to
the country’s economic performance and financial system. Banking and finance
play a vital and crucial role in framing public policies in today’s business
environment. This article highlights the social and ethical issues of banking
such as social banking, ethical banking, green banking, global banking, rural
banking, and agri-banking, which helps achieving sustainable development of
banking and finance.

(1989) discussing how ethical issues put an influence on dealing for the longer
period. They have asked the first question is whether a company or like an
individual has some ethical duty, If we thought about it, yes they have and he
suspected that most people would accept that firms are ethical negotiators.
According to the author like any person, a corporation’s actions can bring good
or harm, means action can be beneficial or harmful. Companies are necessary to
conform to the law and they enjoy the aids of legal protection. However, the
inadequate responsibility status of a company not planned by society to give it
protection from the consequences of immoral performance. However, this is only
the formal situation. More positively, a corporation reflects the arrangement
of its members and the attitude of its headship.

(2014) concluded that non-compliance to best practices and the highest level of
ethics is risky and may lead to huge fatalities including insolvency. The GIPS
standard provides a good comprehensive framework which de-facto has become
industry standard. The main issue is not to make the instructions stricter but
assure adherence and compliance to the morals established. Internal and
external inspection and an obedience department/compliance officer needed to
avoid fraud and other unwelcome unethical conduct toward their customers.

(2006) defined relation between ethics and banking. In the first section, he
defines the views and values of order of ethics. Moral conscience had been over
and done after the individualist and serviceable analysis. However, many people
instructed their behavior by a worthy system that is subtle to social problems,
such as balance with nature, esteem of human rights, and the parity of

(2003) describing the financial industry need to work for evolving and with
conviction for the society to provide the finest in requisites of benevolence
added appeal. As an ethical bank, banks have responsibility and mostly they expected
to work for the society and civilization to create a world, which is
sustainable and developed. Banks should use their finance to improve economy
rather than making profit and become careless towards their responsibilities.
If they want, they can start NGOs to help society and start micro financing,
giving small loans to help young entrepreneurs, or give charity or organize
charitable events. Currency, wealth, perceptively and intelligently invested as
a mechanism for maturation and improved quality, social development has a great
influence of these things. This impact is an unbiased boldness to financing and
borrowing. In the finance market, money systems become motorized and developed
overwhelming forces at work. Financial managers and establishments are anxious
to the method, which avoid to minimizing risks.

Belás (2012)
highlighted that in his he used analysis for his research, these analysis are
on critical bases for the collection of data he used internal and external
sources like questionnaires, surveys, forms, reviews and designed interviews. Authors
use these journals for his analysis and discover the techniques for the
economics with their collective structure and for ethical banking procedures,
instead of typical journals of economics in the field of business related
banks. Authors research focused on the banking management which is hard to
approach from theoretical judgment. Author research has produced very
interesting results in the area of improvement for banking employee’s
performance and their work with the development to their customers’ needs in
the financial sector of banking; it could lead towards an increase in banks
economical accomplishment.


Issues In Banking Industry

and Joshi (2011) concluded that they have gone through a series of development
that are taking place in current business scenario. Moreover, in the last part
they analyzes the review of past studies on the theme. In conclusion they have
discuss about the some important issues regarding environmental issues and
increase in harmful influences of industrial development in the society. They
have highlighted that the sustainability is important for organizations to
adopt because it provides benefit by building ecofriendly, ecological or
recyclable products for the society. If banks disburse their loans to the
ethical and social businesses that have environmental concern, so they can
project themselves as ethical bank. However, it is possible that it will slow
down our growth of economy but humanity cannot allow this growth on their
environmental, wildlife and earth’s natural resources depletion. It is way
better for lending finance practice on the societal measure rather than
generating profit alone. It is best time to focus on important issue regarding
ethical banking industry however, it is possible to achieve by putting society
interest over their interest.

(1989) concluded that banks needs to be trustworthy for their customers who
trusts them to make sure that their money is safe and in good hands and they
have a responsibility to use their money dutifully and lend it to the person
who is responsible. Banking is an important segment of risk taking activities
where you rewarded for ethical practices. The aid depends on customers’ to make
succeed their business and to exhibit moral values. It’s expected from banks
that, they will help people to avert their burdens and inducements.
Responsibility of banks stretches towards the society, customers’, consumers, stakeholders,
faculty, employees, staff and the government.

(2014) determines in his study about the present compartment, principles and
learning of the journals of his field. The properties of outcome will cover the
ethical compartment of financial sectors. Authors is interrogating with giving
ideas such as ethical ideas for advancement of society, and what stakeholders
wants without consulting what we have today. His research proposals could lead
industries to change their point of view consulting with the problem they have
faithfulness and devotion.

(2006) concluded in this section, they have discussed the behavior of society, in
which society have always the power to change their state they always have that
authority because they are consumers as well as investors. If people are investors,
they have authority to select in monetarist marketplace, among establishments
and products. Author summarizes his work for the economic tendencies, which
perceive an ethical morality. Since his research designed to analyze the
banking ethics attitude towards the customer preferences, it might give useful
information about the ethics in the banking industry; this study provide the
reasons for how the banks failed with ethics of banking industry and in
reckless risk taking. One major cause of the financial crises was the banks’
lack of effort to have good ethics.

(2002) concluded that truthfulness is an important quality to build faith, it
is essential for financial institutions to inaugurate. In ethical banking, they
should try to avoid the lending penalties and work with the empathy, which will
bring investors and borrowers closer to each other, which could not be possible
in conventional or commercial banking. Responsibility, they have to use
carefully the investment that they use as a loan, they should make sure that
the loan should be utilize in appropriate or right way or use for some useful
purpose for the society. At last affinity, they should understand the ethical
or moral values of economic development or society. For the affinity purpose,
they make some affinity credit cards, whenever this card used for the
transaction a small amount of money donated to the charitable organization.

(2003) concluded that they have examine and equate the return on assets (ROA)
and evenhandedness for over 5 years period of time for ethical and commercial
banks recorded on ecological mark. Author did the critical analysis; he used a
levelheaded data standard and unbiased purpose for his analysis. For the
conclusion, he determines that rates of return are high for commercial banks, because
if they take higher risk there is a chance of getting higher rate of return.
However, if we compare ethical banks with the conventional banks we will find
that ethical banks are more modest than conventional bank, as they associate with
the conditions of existent system.

(2003) defined in his research that bank play a very crucial and important role
in economy and the field of all commerce. His research aims to examines those
basis of ethics where banking practice features suitable for banking and
bankers. Author also talks about conflicts of banks between its customers, fee
structure, policies, insurance policies, lending and borrowing polices which
plays a role of conflict of interest. His research examines the proof of
qualitative interviews with high-ranking banker from different locations in the
field of banking areas. There is critical situation to assign ethical
catastrophe to American trainings that initiate disasters, which have overwhelmed
proprietors and the worldwide economy.

(2012) suggested that moral principles attempts to displays that the knowledge
of business but in corporate it is not mutual. Evaluations of managements in
firms it is unexpected to the self-controlling apparatus as corporates social
responsibility to be operative for business ethics. Some specific commercial
banks have marketing tool as useful which is ethics and their responsibility
towards society which is considered as apparatus to cooperating with public
from the perspective of bank management and it’s not combined with the
conditions of banks. We have witnessed the crisis of financial industry which
occurs because of deficiency of ethical values in different processes.

(2013) methodology consists of social network analysis, interviews and
secondary data analysis. It explains why a mixed method approach is useful in
exploring structural aspects and examining socio-political facets of the
ethical banking sector. Whilst overwhelmingly pragmatic in nature, the chapter
will also discuss how the simultaneous collection and analysis of data has
informed later cycles in the research. It outlines the research process and
highlights how problems faced and dealt with. Moreover, it focuses on how the
triangulation of data benefits this research by stimulating a critical
engagement with sometimes-contradictory evidence.

(2011) highlighted that funds can be differ on the mentioned terms such as
culture values, products, clients interest and accents on the private and
public banks, ethical and sustainable banks, environmental banks and social
banks, they all have same mission to perform banking practices and investment
for the societal development. There is a difference of complementary qualities it
can be productive in the grouping. According to author, these banks are doing
their contribution to the society and work for the innovation in financial

are those institutes, which lend and borrow money on some interest, as we
know that banks are playing very important and crucial role in country’s
economy. Banks have built a very strong image around bank accounts with the
help of their security, protection, and safety. They have make sure that the
customer transactions will be secured and they have sending a message that
physically transactions is unsecured but through banking it is secured and
reliable. In unfortunate events people can loss their money but banks assured
them that their transaction are safe and even banks give them interest on their
amount of money. But there are some ethical issues appearing when bank borrows
and lend money from creditors. While using creditor’s money they got some
responsibilities as well.

a days banks are only working for their interest or generating profit while
making profit they took overstep on their principles and neglect their
responsibilities as a corporation they have, they does not care about the moral
values of society. They just invest where they get large amount of profit, but
there is some ethical issues appears when they make investment. Because banks
does not care what will happen to the investment that they made. It has
discovered that every year over 100,000 people goes bankrupt as well as bank
goes bankrupt too, because investee’s are unable to pay their loans to banks as
well as bank is also unable to pay its funds to its clients. For example, if
banks lend money to a person on some fixed amount of interest but if that
person gives another person that loan on some higher interest and 2nd person
again forward that investment to another but what will happen if that 3rd
person goes bankrupt in this chain than it means all lenders goes bankrupt too.
That is the common example of bankruptcy but we have found that banks got so
much power because they can create money from thin year and they can manipulate
the power of money through inflation. Most of the cases it is found that many
biggest banks or well-known banks are involved in some kind of scam, fraud, scandal
or in some illegal activities.

is possible to reduce or eliminate these issues and banks can be better. If
they start working as an ethically responsible, many banks have realized in
developed countries the importance of ethical banking. If banks start focusing
on their work, act with prudence, loyalty and care, client’s confidentiality,
investments must be made with the customer’s approval. Fair dealings while
making investment analysis, suggestions and taking investment actions. Must extremely
supervise or check the dealings or fair trade between customers to avoid fraud
or scam. Investors must put pressure in banks to make them must follow the
actual principles of ethics. They should pay attention on their investment that
how is being used to the implications it has and make some strict ethical
criteria to handle their investments.