Ethics in Financial Environment The Financial environment is constantly growing. With increasing technology and various means to commit a fraud, ethics are extremely important. The employees as well as the business owners are required to be aware of the ethics and also follow it religiously. For any business to survive or to overcome any hindrance, ethics are of great help. The financial environment consists of various activities involving different institutions as well as people. The employees as well as senior members are tempted to commit a fraud and manipulate the accounts of the organization. There are various reasons which require ethics to be an important part of any organization.
Financial and banking services are one of the largest services in the world. Trust and integrity runs the business and trust and confidence ensures that the service sector keeps growing. There is extreme dominance of financial sector on the economy which makes it even more difficult to follow ethics in the business. Doing the right thing is easier said than done. In various complex situations it becomes difficult to make the right decision or to follow ethics. Many situations could also lead to a loss or damage reputation of the organization if ethics are followed. Such complexities make it difficult to decide on the right thing to do. There are various facets to a situation and it is difficult to judge which action will be the right one to do. In extreme situations, ethics lead the way. Ethics always lead the way in the long run and it is advisable to follow them as well as ensure that others follow it too.
Finance depends on trust. The investment as well as returns are usually based on trust and integrity. This makes it even more important to follow ethics in the industry. Ethics play a part in various everyday decisions. Like improving the financial reporting so that additional information is available for the readers, like providing the right guidance to investors, like showing the downside of any investment. Ethics may lead to a loss of customer base or a loss in business. But where there is trust, the customer will return. Trust cannot be achieved only by laws, statutory requirements or disclosure of the minimum information. The investors do not know if the decision to invest was right or wrong until a certain period of time has passed by. Similarly, the institutions also do not disclose all the relevant information to the investors. They are made to believe that the investment will be fruitful and generate returns which may not be the case. If trust falls, the markets fall. Hence it is extremely necessary that the ethics lead the way for decision makers. The financial system should consist of high ethical standards and it should not be imposed on anybody. Instead ethics should be based on morals which each individual should follow. When an individual has a choice, the morals and conscience should ensure that the right thing is done. Non ethical behavior is also illegal behavior. Various non-ethical activities lead to illegal results. What cannot be done legally is done by non-ethical means. With the ever changing economy and various challenges coming in the way, it is difficult for the financer to take the right path as well as do the right thing. The decision should be taken for the economy as a whole and not for personal benefits.
After Enron scandal, stories on ethics are many but there is nothing that can justify the decisions taken by them. No fraud or scandal can be justified in terms of the ethics. Bankers specially need to work at being ethical. Financial institution mainly consists of banks and their business is completely based on trust. Ethics is more than the document that details the ethical behavior in an organization, it is also more important than the expected behavior of the managers and the staff. The ethics should be reflected in every segment of the business- products and services. The organization should know the difference between showing revenues so as to show higher profits and reporting the correct amount so as to provide factual information. Ethics cannot be forced on anybody. They also cannot be followed for the sake of laws or statutory requirements. Ethics need to be imbibed within an organization, with the morals of each person engaged in the organization.
There is no question about the ethics to be followed or not. Wrong decisions and major scandals show the lack of ethics and the less importance of morals in the organizations. Banks are specially required to follow the right conduct and stick to ethics. The right decision or the right action can be taken only when the ethics are followed and everyone in the organization is aware of it. Signing a document of ethical behavior will not ensure the correct decision making. Only morals and good ethics in each individual can bring about a change. The industry can be impacted with non-ethical actions, this has to be reduced and more ethical behavior should be promoted. When the business itself is based on trust and integrity, ethics form an important part of the industry. What is needed is awareness and acceptance towards ethics.
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