The Credit Crisis and the Moral Responsibility of Professionals in Finance
AbstractStarting from MacIntyre's virtue ethics, we investigate several codes of conduct of banks to identify the type of virtues that are needed to realize their mission. Based on this analysis, we define three core virtues: honesty, due care and accuracy. We compare and contrast these codes of conduct with the actual behavior of banks that led to the credit crisis and find that in some cases banks did not behave according to the moral standards they set themselves. However, notwithstanding these moral deficiencies, banks and the professionals working in them cannot be fully blamed for what they did, because the institutional context of the free market economy in which they operated left little room for them to live up to the core values lying at the basis of the codes of conduct. Given the neo-liberal free market system, innovative and risky strategies to enhance profits are considered desirable for the sake of shareholder's interests. A return to the core virtues in the financial sector will therefore only succeed if a renewed sense of responsibility in the sector is supported by institutional changes that allow banks to put their mission into practice.
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Bibliographic InfoArticle provided by Springer in its journal Journal of Business Ethics.
Volume (Year): 103 (2011)
Issue (Month): 4 (November)
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Web page: http://www.springerlink.com/link.asp?id=100281
Anglo-Saxon capitalism; banking; credit crisis; financial ethics; MacIntyre; professional ethics; virtue ethics;
Other versions of this item:
- Graafland, J.J. & Ven, B.W. van de, 2011. "The Credit Crisis and The Moral Responsibility of Professionals in Finance," Discussion Paper 2011-048, Tilburg University, Center for Economic Research.
- B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
- B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
- G01 - Financial Economics - - General - - - Financial Crises
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- Z12 - Other Special Topics - - Cultural Economics - - - Religion
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