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Ethical Issues in Finance

Finance and Economy for Society: Integrating Sustainability

ISBN: 978-1-78635-510-2, eISBN: 978-1-78635-509-6

Publication date: 16 December 2016

Abstract

Purpose

The purpose of a presumed incompatibility of ethics and finance has been strengthened by the recent crisis that erupted in Summer 2007. To attempt to escape from this dilemma, the restoration of relevant ethical principles would be one of the main conditions required in order to avoid the recurrence of past errors.

Methodology/approach

The chapter develops a methodology including three steps: first stating a major principle, then defining a rule and finally proposing possible implementation, taking of concrete steps.

Findings

Assessments of the financial crisis most often consider that the sources of the problems stem from economic and financial imbalances and failures. Indeed, this kind of explanation is relevant and may be agreed as a proximate cause. But such a widespread, long-lasting crisis relied on worse and deeper roots. Misconduct and greed by financial players and market participants was a culprit for the crisis. To address this issue, the chapter develops eight principles that can contribute, at least to some extent, to fulfill the basic mission of finance.

Research implications

This chapter raises the question of whether there was an earlier period where finance was more closely tethered to ethical principles. Looking at the ideas of those who make a distinction between moral doctrine and ethics can help to understand the nature of the crisis and to implement practical solutions even though these concepts are often confused and mixed-up.

Practical/social implications

The implications of ethical behavior based on the principle of seeking the “common good” lead to a professional approach aimed at financial institutions as well as at their executive leaders and their employees. This chapter discusses avenues for thought.

Originality/value

Proposals presented in this chapter combine eight ethical principles, two final observations and practical views and suggestions developed in accordance with a three-step approach to be implemented by professionals so that the letter of the rule may never stifle the spirit of the principles.

Keywords

Citation

Béduneau, G. and Gizard, B. (2016), "Ethical Issues in Finance", Finance and Economy for Society: Integrating Sustainability (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 125-137. https://doi.org/10.1108/S2043-905920160000011006

Publisher

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Emerald Group Publishing Limited

Copyright © 2017 Emerald Group Publishing Limited