Integrity In Banking Industry Essay

Recent financial history is littered with crisis and scandal, which has led to a fall in confidence and trust within the banking sector. From breaches of money laundering regulations by leading banks to allegations of corruption and illegality, regulators and business leaders have contributed to the, ‘cultural and ethical failures’ in the banking sector. Such incidents have resulted in an overhaul of the financial sector’s policies and a promotion of a more ethical culture across the board. There is a realistic expectation that there are limits to financial law and regulation, and instead, greater chances of success lie with the changes in culture and ethics, which ‘play an important role in the governance of financial service firms’ . One …show more content…
Before answering this question, it is worthy of mentioning that bank regulations are somewhat similar across different countries due to the sector operating globally. The study conducted by using the experience of the Dutch banks defined integrity ‘as the quality of acting in accordance with the generally accepted moral values and norms’. Further were identified the key integrity risks such as ‘fraud and theft, money laundering and financing terrorism, and mis-selling to customers’ , while risks pertaining more to the corporate banking business include ‘manipulation of markets, insider trading, and moral hazard’. Cowton advances the meaning of integrity as a crucial component of banking, helping to generate the trust so vital for a financial system to thrive. According to scholar, banks are required to act with integrity towards people who deposit money with them – they should lend with these funds responsibility, ‘in the sense of managing the risk and return characteristics of the lending book’ – supposedly a duty of care owned by banks to their client is assumed. Petrick and Quinn claim that moral progress in business comes through the increase in stakeholders, who on regular basis handle moral complexity by successfully demonstrating ‘process, judgment, developmental and system integrity capacity’ both domestically and …show more content…
Financial regulation is the answer to the idiosyncratic nature of the banking industry. Thus effective regulatory governance in the financial sector is a critical element of financial stability. For Justice Owen, ‘the key to good corporate governance lies in substance, not in form. It is about the way directors of a company create and develop a model to fit the circumstances of the company and then test it periodically for its practical effectiveness. It is about the directors taking control of a regime they have established and for which they are