Ethical Challenges of Financial Services Industry

Abstract

Trade, commerce and industry are based on the profit motive. This motive by itself is not bad as no business organization can run successfully if it continuously suffers losses. But the means adopted to realize the profit should be ethical. The executive of financial services industry has to strike a balance between the technical ‘must’ and the ethical ‘ought’. Cheating is considered as a necessary condition for winning and often “Result-Orientation” is used as a justification for such unethical and immoral practices. Men cannot be made moral by framing rules and regulations alone, radical change must be brought in human nature to avert corruption. Money, both in the form of credit and investments, makes a huge impact on the world. Money is a means, not an end; but, it is a powerful means to do things and therefore evil use of money can indeed create a considerably negative impact on our world. By facilitating money to others, financial institutions enact and empower the community. In our country, we are witnessing one financial scam after another. A large number of people withholding investment from companies that are involved in the alcoholic beverages distribution, use of additives in food production, international arms trade, animal rights violation, and environmental pollution. When banks lend money to others, the bank may not be doing wrong by itself; other entities might be engaged in wrong-doing. But it does not excuse these financial institutions from their moral responsibility. Engaging in excessively speculative investments and irresponsible credit lending practices is morally unacceptable. Bankers and financial professionals should take a responsible approach in all investment and lending operations with its customers’ money. The aim of this paper is to identify the issues of responsibility faced by individuals and institutional financial players.