Module Code: BFE0012
Introduction to Financial Services
By Martin Chance
Banking: An Ethical Dilemma?
In this report, I plan to discuss the question Banking: An Ethical Dilemma? Within this is I will discuss ethical dilemmas in association with banking. I will firstly start by giving definitions of what is meant by the terms: Banking, Ethics, and Dilemma. From here, I will go on to identify what banks are and what the roles and importance are for the economy. Next, I will go on to explain banking operations and with this identification, I plan to then discuss the ethical dilemmas and show my opinion on the question ‘Banking: An Ethical Dilemma?’ I will then discuss any other issues unrelated to ethical dilemmas within the banking sector and with this; I plan to use references and facts to support my argument on the subject. Finally, I will identify my finding regarding the dilemma and try to conclude on whether banking is ethical.
Firstly, ‘Banking’ can be defined as one of the key drivers of the economy. Banking provides a safe place to save excess cash, known as deposits. It also supplies liquidity to the economy by loaning this money out to help businesses grow and to allow consumers to purchase homes, cars and consumer products. Banks primarily make money by charging higher interest rates on their loans than they pay for deposits. (http://useconomy.about.com/od/glossary/g/Banking.htm) ‘Ethics’ comes in many forms but can primarily be defined as the code or rules of moral principles that are set standards of good or bad, or right or wrong decisions, in personal conduct and therefore is a guide to the behaviour that is morally acceptable from a person or within a group or an organisation. Ethics effect moral decision made by people, and its main concern is what is good and though to be best for society. Siddiqui (2010) With this definition of ethics, ethical behaviour is very much as it seems. The behaviour is used surrounding ethics. It is behaviour, which is seen to be accepted as good or bad, or right or wrong, within organisation rules and obligations and government laws. It is about being responsibly and acting in an honest and fair way taking into consideration whether the actions taken are affecting people in a way that would not be seen as ethical. ‘Business Ethics’ is the same aspects and contains the same issues of ethics and ethical behaviour but is put into a business context. This is deal with on a daily bases throughout every organisation in the world. Within this subject, business ethics is not just based on the organisation or employees but also to any customer that they may have. Many organisations have had their reputation tarnished with bad publicity due to the business ethics. This can be down to employment or how the organisation is ran, this can include poor working conditions, exploiting people or even down to low wages. Organisations that do not follow in business ethics can result in breaking the law that can lead to them being sued; the problem with this is that multi-million businesses can often afford to take a hit but never the less that is no excuse to disregard their ethical behaviour. Finally, the term ‘Dilemma’ can be defined as: a situation that requires a choice between options that are or seem equally unfavourable or mutually exclusive. (http://www.thefreedictionary.com/dilemma) Banks are seen in many forms, they primarily come in the following forms, which are Retail, Central, Investment, and Building Societies. The main purpose of a bank is to provide a safe place where people have confidence to deposit money. It is seen that banks are produced and ran by honest people. As well as storage of money, there are many other purposes to bank, but they are separated into individual banks and depends are on what form of bank they represent. Retail banks are otherwise...