ESR case study

Topics: Human rights, Bank, Ethics Pages: 5 (1540 words) Published: November 19, 2014

Enterprise social responsibility

Submitted by: Md shafiqul Islam
Student ID: 21248068
1.1 Identify each of the stakeholders and how they are affected. What are the main harms and benefits in this case for the different stakeholders based on the current situation?

Stakeholders are every person and organization directly or indirectly involved. This study case of financial crisis has affected many stakeholders such as banks, employees and their customers. The 2008 crisis is the scariest one after the Great depression. Lord Vicker, who showed the findings of the independent banking commission, argues that in order to keep the banking sector flowing, they need to have high capital, retailing and investments for lending. There were several British companies that were affected in this crisis, for example, Northern Rock and Bradford and Bingley. They were offering up to 125% of ‘Loan to value’ mortgages and loans based on individual’s statements. The institutions were affected by two major problems; they were not able to make high returns on capital and there were too much high level of money deposits. Americans banks were ahead of others during the crisis as Chinese money was invested with them. They had more open opportunities compared to others during the crisis and they had much more freedom on how to run their businesses. A lot of people who did not have concrete income benefited from this crisis as banks lend them loans despite them having a poor credit history reputation. Lots of credit cards were given out and were charged in extremely high rate of interest so banks could earn some more money. They had the chance to get the money and pay back monthly, which definitely benefited them. Taking a loan was easy so many businesses developed and was created. Collateralized Debt Obligations did not earn anything from this as list of bad debts kept increasing because a lot of people could not pay back what they took from the bank. This process is known as ‘bundling’. Alongside with bundling were assets, which did not profit them as well. The housing market was also affected badly as the estate price drop and people could not afford to buy luxury housing. Shares have dropped for banks and companies such as Northern Rock. However by 2010, recovery took place and made things under control. It strengthens a lot of banks and economies (The Financial Crisis – a Case Study). 1.2 From a utilitarian perspective, would you argue for or against the proposed tightening of UK banking regulation?

Utilitarian is a type of view under the ethics principle. A person who agrees with this view believes that right action makes people happy. Moreover, they argue that an action is correct if it gives maximum happiness to the greatest number of people. (Reference) There is a reason why banking sector are making their regulations stricter than before. They are going through crisis and this is not only affecting the economy but lots of people. Therefore, banks are making rules that can harm people and their banking services. It can be difficult for people. The actions are that outgoing by banking sector is not right as it is not brining happiness to the greatest number of people. The whole crisis is not a utilitarian act. However, in a long run, it may be a utilitarian act as bank will give more opportunities and choices to people. But during crisis, bank’s regulation is not a utilitarian act and does not benefit maximum number of people. Bank of England also controlled the inflation rate, which made a huge difference in the overall decisions and economy. A lot of bankers did not get bonuses which are considered right because it is wrong for a few bankers to get their wishes yet so many people are suffering from the banking regulations (Donaldson & Kingsbury, 2013).

1.3 Using arguments based on the ‘maxims’ of duty, would you consider the UK banks to have acted ethically in their operations?

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