Why even good people are likely to do bad things in finance – it’s not the people that are flawed, it’s the culture

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This paper analyses the current state of ethics in finance, and especially banking institutions. The focus will be on identifying the factors that are conducive to unethical practices. I will argue that, although financial scandals are ultimately triggered by individuals, these should not bear the entire blame – for the prevailing work culture at many financial institutions is flawed, and directly encourages and rewards unethical behaviour and practices. This means that the system will face even more turmoil before long.

The paper begins by discussing the definition and importance of ethics in business relations. It then explains why ethical behaviour cannot be ensured by more financial regulation, and how too many rules can actually undermine ethical standards. The third part analyses the ethical shortcomings of the financial corporate culture, and the paper concludes with some final remarks.

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