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Do the Right Thing! Developing Ethical Behavior in Financial Institutions

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  • Rachel Fichter

    (Columbia University)

Abstract

Organizational culture and employee conduct in financial institutions are coming under increasing scrutiny by regulators who seek to identify the underlying sources of unethical behavior. The literature on ethics in the workplace has often emphasized the importance of the alignment of systems and processes with organizational values and the role of the leader in creating an ethical culture. Less is known about how individual employees experience the ethical decision-making process, especially in complex and high-risk business environments where there are discrepancies between an organization’s formal ethical standards and its informal practices. This article combines ethical decision-making models with key concepts from organization and adult learning theories to develop a deeper and more nuanced view of how individuals in financial institutions deal with ethical issues that arise in their daily work. Eight practical ideas are formulated to help financial institutions narrow the gap between formal ethical standards and actual practices and develop a culture that promotes ethical behavior: challenging authority, creating opportunities for discourse, valuing positive emotion, making time for reflection, rewarding ethical behavior, strengthening escalation processes, eliciting feedback, and establishing a learning culture.

Suggested Citation

  • Rachel Fichter, 2018. "Do the Right Thing! Developing Ethical Behavior in Financial Institutions," Journal of Business Ethics, Springer, vol. 151(1), pages 69-84, August.
    • Handle: RePEc:kap:jbuset:v:151:y:2018:i:1:d:10.1007_s10551-016-3275-7
    DOI: 10.1007/s10551-016-3275-7
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    References listed on IDEAS

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    2. DELIS, Manthos & GALARIOTIS, Emilios & IOSIFIDI, Maria & MONNE, Jerome, 2023. "Poverty and seeking bank advice: Evidence from a survey experiment," Journal of Financial Stability, Elsevier, vol. 67(C).
    3. Kristin Lee Sotak & Andra Serban & Barry A. Friedman & Michael Palanski, 2024. "Perceptions of Ethicality: The Role of Attire Style, Attire Appropriateness, and Context," Journal of Business Ethics, Springer, vol. 189(1), pages 149-175, January.
    4. Jennifer Kunz & Mathias Heitz, 2021. "Banks’ risk culture and management control systems: A systematic literature review," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 32(4), pages 439-493, December.
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    6. Delis, Manthos & Galariotis, Emilios & Monne, Jerome, 2021. "Financial vulnerability and seeking expert advice: Evidence from a survey experiment," MPRA Paper 107095, University Library of Munich, Germany.
    7. Malik, Ashish & Froese, Fabian Jintae, 2022. "Corruption as a perverse Innovation: The dark side of digitalization and corruption in international business," Journal of Business Research, Elsevier, vol. 145(C), pages 682-693.
    8. Gerhard Philip Maree Grebe & Johan Marx, 2023. "The Perceived Relationship between Risk Culture and Operational Risk Management Practices of Ghanaian Banks," JRFM, MDPI, vol. 16(9), pages 1-22, September.

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