Vignettes to identify the ethical domain of an emerging country's banking sector: the experience of Turkey

Abstract

The fiduciary dimension of the banking business creates a high potential for ethical violations and financial fraud leading to systemic crisis, regardless of national boundaries. In emerging markets, the lack of adequate legal and regulatory systems in the financial sector facilitates the exploitation of a free moral space. The moral integrity of bank managers, as guardians of others' money, is crucial to the sustainability of the system. This study aims to assess the ethicality of some banking practices as perceived by top bank managers in Turkey, an emerging market. To this purpose 22 sector-specific vignettes that describe possible misconduct were developed and a field survey conducted. Vignettes were mailed to top managers of all the banks. The response rate was 29%. The findings, on the whole, indicate a high level of ethical awareness on the part of banks' top managers. The respondents' approval threshold is higher when the stockholder demands to be successful in the short run, at the expense of the customers and the other stakeholders of the bank. Another finding is that the respondents do not consider extending partial treatment to those with whom the manager has a care relationship as a violation of ethical norms.