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Professional Ethics in Banking and the Logic of “Integrated Situations”: Aligning Responsibilities, Recognition, and Incentives

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  • Lisa Herzog

    (Bavarian School of Public Policy at the Technical University of Munich)

Abstract

The paper develops a responsibility-based account of professional ethics in banking. From this perspective, bankers have duties not only toward clients—the traditional focus of professional ethics—but also regarding the prevention of systemic harms to whole societies. When trying to fulfill these duties, bankers have to meet three challenges: epistemic challenges, motivational challenges, and a coordination challenge. These challenges can best be met by a combination of regulation and ethics that aligns responsibilities, recognition, and incentives and creates what Parsons has called “integrated situations”. Professional associations play an important role for this purpose, especially as spaces in which peer recognition is earned. But financial incentives equally need to be brought in line, for example, through deferred bonuses or claw backs. Such measures can create a new culture of accountability in banking.

Suggested Citation

  • Lisa Herzog, 2019. "Professional Ethics in Banking and the Logic of “Integrated Situations”: Aligning Responsibilities, Recognition, and Incentives," Journal of Business Ethics, Springer, vol. 156(2), pages 531-543, May.
    • Handle: RePEc:kap:jbuset:v:156:y:2019:i:2:d:10.1007_s10551-017-3562-y
    DOI: 10.1007/s10551-017-3562-y
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    References listed on IDEAS

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    Cited by:

    1. Galletta, Simona & Mazzù, Sebastiano & Naciti, Valeria & Paltrinieri, Andrea, 2024. "A PRISMA systematic review of greenwashing in the banking industry: A call for action," Research in International Business and Finance, Elsevier, vol. 69(C).
    2. Jakob Moggia, 2021. "Moral Responsibility for Systemic Financial Risk," Journal of Business Ethics, Springer, vol. 169(3), pages 461-473, March.
    3. Kladakis, George & Chen, Lei & Bellos, Sotirios K., 2023. "Ethical bank disclosures and liquidity creation," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 84(C).
    4. Dawn Yi Lin Chow & Thomas Calvard, 2021. "Constrained Morality in the Professional Work of Corporate Lawyers," Journal of Business Ethics, Springer, vol. 170(2), pages 213-228, May.
    5. Dancsik, Bálint, 2020. "Rendszerszintű kockázat rendszerszintű erkölcs nélkül. Kiegészítések a pénzügyi válságok etikai magyarázatához [Systemic risk without systemic ethics. Supplements to the ethical explanation of fina," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 225-243.
    6. Caleb Bernacchio, 2020. "Review of Review Reclaiming the System: Moral Responsibility, Divided Labour, and the Role of Organizations in Society by Lisa Herzog," Journal of Business Ethics, Springer, vol. 161(3), pages 707-710, January.
    7. Ayesha Scott, 2023. "Financial Abuse in a Banking Context: Why and How Financial Institutions can Respond," Journal of Business Ethics, Springer, vol. 187(4), pages 679-694, November.
    8. Dawn Yi Lin Chow & Andreas Petrou & Andreas Procopiou, 2023. "A Perspective on the Influence of National Corporate Governance Institutions and Government’s Political Ideology on the Speed to Lockdown as a Means of Protection Against Covid-19," Journal of Business Ethics, Springer, vol. 185(3), pages 611-628, July.
    9. Abdelsalam, Omneya & Chantziaras, Antonios & Ibrahim, Masud & Omoteso, Kamil, 2021. "The impact of religiosity on earnings quality: International evidence from the banking sector," The British Accounting Review, Elsevier, vol. 53(6).

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