Banking; an ethical dilemma Essay Example | Topics and Well Written Essays - 2500 words

Banking; an ethical dilemma - Essay Example This paper attempts to discuss the ethical dilemma, which can be faced by any bank in its operational activity, both in the external environment and conflicts of interest arising within the organization. The ethical dilemma that arises within working environment of a bank is more severe, as these systematically weaken the vibrant economic system of a country. The concept of ethical dilemmas had become more pressing during the recent financial crisis, as it was strongly believed that unethical conduct of the financial industry in general and banking in particular, had led to global economic meltdown. The purpose of this paper is to discuss ethical considerations of the banking industry and compliance of the banks to these ethics in order to understand the way banking industry faces the challenges of ethical dilemma. The last section of the paper discusses few of the policy recommendations, which can help to resolve issues of ethical dilemma faced by the banks. A vibrant banking industry is extremely important for proper functioning of an economy. This makes the issue of ethical considerations in banking an extremely relevant topic. Banking sector merely acts as an intermediary between the depositor and creditor. A respectable bank is expected to be honest, exhibit integrity in its transactions, social responsibility, accountability and compliance to promises (Solomon, 1992). The ethical dilemma for banks arises because they have to work in grey area of ethics and often under high level of pressure. Sometimes, in order to gain financial benefits, banks often end up making decisions that undermines ethical issues, which is the root cause of the problem. There have been numerous cases where banks have been involved in scandals revolving around acceptance of bribes, advancing loans to unfit customers and lending to connected parties, which may be considered as unethical on part of the bank. In a research conducted by Carse