Module-1

These two terms are similar in nature. Ethics and morality are essential in conducting business
activities in smooth manner.

Morality

Morals are how to judge others. Morals have a greater social element to values and tend to have a
very broad acceptance. Morals are more about goods and bad than other values. We thus, judge
others more strongly can described as a core set of values and belief that act as guide while
formulating course of action.

Ethics

Ethics are professional standards. Ethics are thus internally defined and adopted, while morals tend
to be externally imposed on others. Ethics is a branch of philosophy concerned with human values
and conduct, moral duty and obligation, Basically ethics is concerned with what people might
describe as right and wrong human conduct.

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 • Importance of business Ethics
1. Satisfying Basic Human Needs

Being fair, honest and ethical is one the basic human needs. Every employee desires to be such
himself and to work for an organization that is fair and ethical in its practices.

2. Creating Credibility

An organization that is believed to be driven by moral values is respected in the society even by
those who may have no information about the working and the businesses or an organization.
Infosys, for example is perceived as an organization for good corporate governance and social
responsibility initiatives. This perception is held far and wide even by those who do not even know
what business the organization is into.

3. Uniting People and Leadership

An organization driven by values is revered by its employees also. They are the common thread that
brings the employees and the decision makers on a common platform. This goes a long way in
aligning behaviors within the organization towards achievement of one common goal or mission.

4. Improving Decision Making

A man's destiny is the sum total of all the decisions that he / she takes in course of his life. The same
holds true for organizations. Decisions are driven by values. For example an organization that does
not value competition will be fierce in its operations aiming to wipe out its competitors and establish
a monopoly in the market5. Long Term Gains

Organizations guided by ethics and values are profitable in the long run, though in the short run they
may seem to lose money. Tata group, one of the largest business conglomerates in India was seen
on the verge of decline at the beginning of 1990's, which so on turned out to be otherwise. The
same company's Tata NANO car was predicted as a failure, and failed to do well but the same is
picking up fast now.

Q) Friedmad’s Theory

Friedman’s economic theory

American economist Milton Friedman developed the doctrine as a theory of business ethics

that states that “an entity's greatest responsibility lies in the satisfaction of the

shareholders.” Therefore, the business should always endeavor to maximize its revenues to

increase returns for the shareholders.

Friedman believes that the shareholders form the backbone of the entity, and they should be

treated with the utmost respect. Profits maximization requires the entity to find ways of

generating additional revenues through value addition and creating more products and

services while minimizing costs. Friedman also stated that shareholders should be in charge

of key decisions such as social initiatives rather than getting an outsider to make the decision

on their behalf.

the economist explained that an entity does not have any social responsibility to the society

around it whatsoever. Instead, he stated that the only responsibility that an entity should abide

by is its shareholders.

Friedman justified his claim by explaining that any executives in business are employees of

the owners, and they are, therefore, required to deliver quality service to the employer first

before any other party. Individuals employed in corporate entities are required to conduct

their roles in the business according to the expectations of the employer.

The Friedman Doctrine holds that decisions concerning social responsibility rest on the

shoulders of the shareholders, not the executives of the company. He argues that an entity is

not obligated to any social responsibilities unless the shareholders decide to such an effect.

Any social responsibilities to the society require resources and should, therefore, be arranged

before they are executed. The use of a company’s resources is subject to approval by the

shareholders, who are the final decision-makers on important decisions such as the use of

financial resources.

Social responsibility activities such as the development of social amenities for the community

are capital-intensive and will affect the financial resources of the entity.
 • Ethical Issues in Marketing.

1. Making false, exaggerated, or unverified claims

In a desperate bid to compel potential and existing customers to buy their products or services,
some marketers use false statements, exaggerated benefits, or make unverifiable claims about their
offers.

For Example - This is common in the weight loss industry, where marketers convince potential
buyers that a particular product can help them shed so-and-so pounds within two weeks without
exercise or dieting!

Distortion of facts to mislead or confuse potential buyers

This is another common unethical marketing practice. A typical example is when a food processing
company claims that its products are sugar - free or calorie-free when indeed they contain sugar or
calories. Such a company is only trying to mislead potential buyers, since they are unlikely to buy the
products if it is made known that they contain sugar or calories.

3. Concealing dark sides or side effects of products or services

This unethical marketing practice is rife in the natural remedies industry, where most manufacturers
deceive potential buyers that their products have no side effects because they are "made from
natural products". But in reality, most of these products have been found to have side effects,
especially when used over along period. Infact, there's no product without side effects - it's just that
the side effects might be unknown. It's better to say,

"There are no known side effects" than to say "there are no side effects"

4. Bad-mouthing rival products

Emphasizing the dark sides of firm's rival's products in a bid to turn potential customers towards
one's own products is another common but unethical marketing practice. Rather than resort to this
bad strategy, one should emphasize on those aspects that make firm's offer standout from the rest
of the pack. That's professional and ethical.

5. Using of women in irrelevant advertising

The rate at which even reputable brands are resorting to this unethical marketing practice is quite
alarming.

Q) Ethical Issues in Accounting.

Pressure to Manipulate the Figures

Running a business puts you under a great deal of pressure, especially when things are not going
well, or at least not as well as you need them to go. When that happens, the temptation to lean on
your accountant to fudge the numbers can be hard to resist. It's a real problem for accountants,
whether they're employees or an outside firm you've hired.

Access to Information and Confidentiality Issues

Like doctors and lawyers, accountants naturally spend much of their time dealing with confidential
information. Using that information inappropriately, or failing to protect confidential information
properly, are both ethical issues for an accountant. Insider trading – use of confidential information
to take advantage of an upcoming growth or drop in the company's value – is one of the most
obvious issues.

Conflicts of Interest

Conflicts of interest can be an especially difficult ethical issue to recognize. If your senior accounting
staff receives bonuses based on the stock price, for example, they have a motivation – consciously or
unconsciously – to make decisions that favor higher stock prices, even if they're not good for the
company or its investors in the longer term. For similar reasons, accountants doing audits of your
company's financials might follow the folk wisdom that says, "don't ask questions you don't want
answers to.

Blowing the Whistle

One final ethical dilemma accountant may face is the thorny question of when to blow the whistle
on a company or a division that's unethically manipulating or misstating its numbers. If the
accountant's information is damaging enough, it could cause a company to fail or lose much of its
stock value overnight. That can hurt thousands of investors, or put the accountant's own friends and
co-workers out of work and into financial jeopardy. There's a very real risk of backlash and
intimidation, and a reputation as a troublemaker can be a career-breaker.

Q) Ethical Dilemma + Decision Making

An ethical dilemma takes place in a decision-making context where any of the available options
requires the agent to violate or compromise on their ethical standards.

We observe that ethical dilemmas can be characterized by the following three elements:

The agent must be faced with a choice or the need to make a decision.

The agent must have more than one course of action available.

The agent recognizes that all available courses of action require them to compromise on some
personally held ethical standard or value.

Ethical standards are the moral frameworks that individuals and organizations use to guide their
decision-making and differentiate between right and wrong. Companies and professional
organizations may adopt their own ethical standards and require that employees/members adopt
those standards as part of their personal business ethics.

• Types of Ethical Dilemmas

 Epistemic dilemmas take place in a decision-making context where moral
standards conflict and the agent cannot readily determine which ethical principle
should take precedence over the other.

A self-imposed dilemma is one created by the agent’s own errors in judgment,

such as making competing promises to multiple organizations that cannot be
fulfilled simultaneously. In contrast, a world-imposed dilemma is caused by
circumstances outside the agent’s control.

An obligation dilemma is one where an agent has multiple options and more than
one of them is obligatory, while a prohibition dilemma occurs when all available
options are prohibited.
Example of an Ethical Dilemma?
Ethical dilemmas occur regularly in the business environment where employees
make decisions that impact the success and profitability of organizations.
Employees may experience an ethical dilemma when deciding whether to report an
incident of workplace harassment or declare a conflict of interest. In the first case,
the employee might understand that the harassment is wrong, but feel guilty about
getting their colleague in trouble. In the latter case, the employee might recognize
their fiduciary duty to the organization, but feel a sense of loyalty to their family
and friends that makes it difficult to do the right thing.
• Decision Making

Framework for Ethical Decision Making

Identify the Ethical Issues

Could this decision or situation be damaging to someone or to some group, or unevenly beneficial to
people? Does this decision involve a choice between a good and bad alternative, or perhaps
between two “goods” or between two “bads”?

Is this issue about more than solely what is legal or what is most efficient? If so, how?

Get the Facts

What are the relevant facts of the case? What facts are not known? Can I learn more about the
situation? Do I know enough to make a decision?

What individuals and groups have an important stake in the outcome? Are the concerns of some of
those individuals or groups more important? Why?

What are the options for acting? Have all the relevant persons and groups been consulted? Have I
identified creative options?

Evaluate Alternative Actions

Evaluate the options by asking the following questions:

Which option best respects the rights of all who have a stake? (The Rights Lens)
Which option treats people fairly, giving them each what they are due? (The Justice Lens)

Which option will produce the most good and do the least harm for as many stakeholders as
possible? (The Utilitarian Lens)

Which option best serves the community as a whole, not just some members? (The Common Good
Lens)

Which option leads me to act as the sort of person I want to be? (The Virtue Lens)

Which option appropriately takes into account the relationships, concerns, and feelings of all
stakeholders? (The Care Ethics Lens)

Module-2

Q) corporate Governance

Corporate governance is the system of rules, practices, and processes by which a firm is directed and
controlled. Corporate governance essentially involves balancing the interests of a company's many
stakeholders, such as shareholders, senior management executives, customers, suppliers, financiers,
the government, and the community.

Since corporate governance provides the framework for attaining a company's objectives, it
encompasses practically every sphere of management, from action plans and internal controls to
performance measurement and corporate disclosure.

Importance of Corporate Governance

1. Minimize Agency Problems

Agency is when one entity acts as another entity’s agent. In companies, the management

acts on behalf of the shareholders, which is a type of agency relationship. In some instances,

the board of directors may not act in the shareholders’ best interests. Corporate governance

tackles that problem by ensuring the objectives of both the shareholders and the

management are in line.

2. Protect Stakeholders

Apart from minimizing agency problems, corporate governance protects a company’s other

stakeholders as well. These may include both internal and external stakeholders. Corporate

governance defines the relationship that companies must have with their stakeholders. By

doing so, it ascertains that each stakeholder’s rights are clear for companies to fulfill.

3. Attract Investors

Corporate governance provides companies with a system for best practices. Through this, it

ensures a company’s operations are efficient. As mentioned, it also protects shareholders’

and other stakeholders’ rights. When investors look for companies to invest in, they will
always prefer companies with good corporate governance. This way, corporate governance

can attract new investors.

4. Promotes Accountability

A good corporate governance system ensures that companies follow a sound, transparent,

and credible financial reporting system. This way, corporate governance helps promote

accountability in a company. This accountability can also help in the above aspects, helping

attract more investors or protect stakeholders.

• Importance of CG

Ineffective boards

One of most obvious reasons for corporate failure is the lack of an effective board – and there are
plenty of warning signs to indicate when boards are in over their heads. Clear skills limitations, an
absence of experience in core business areas and the inability of non-executive directors (NEDs) to
hold senior executives to account have repeatedly paved the way for collapse.

Complexity

Intricate processes are certainly necessary at times – but the truth is, excessive complexity is often a
root cause of corporate failure. When flaws begin to appear in even the most well-oiled complex
system, it can be incredibly difficult to correct, often initiating a domino effect that impacts all
aspects of a project or company.

Poor communication

The requirement for an organisation to maintain clear lines of communication should be relatively
obvious to most FDs. Yet time and time again, corporate collapse has been spearheaded by
communication lapses. After all, even the most effective board cannot lead an organisation if it’s not
kept in the loop.

• Elements of CG

1.Direction

Providing overall direction for the business, its leaders and employees is a major part of corporate

governance. Making strategic decisions and discussing current and future concerns of the company

are tactics of this element. Company mission and vision statements stem from the governance role

of business. These statements provide a sense of purpose and illustrate primary motives for the

company's business activities.

2. Independence of directors

If the directors of a company are also the owners and/or their family members, entrepreneurs

appointed by friends, or individuals who are involved in the daily management of the company, the
board is unlikely to be impartial. Having a majority of non-executive independent directors will help

avoid prejudice and conflicts of interest between the board and the management. Independent

judgement is almost always in the best interest of the company.

3. Effective Risk Management

Even if your company implements smart policies, competitors might steal your customers,

unexpected disasters might cripple your operations and economy fluctuations might erode the

buying capabilities of your target market. You can’t avoid risk, so it’s vital to implement effective

strategic risk management. For example, a company’s management might decide to diversify

operations so the business can count on revenue from several different markets, rather than depend
on one.

Q) Unfair Business Practices

What is Unfair Trade Practice ?

An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or
supply of any goods or services, adopts unfair method, or unfair or deceptive practice.

Unfair practices may be categorized as under:

1.False Representation

The practice of making any oralnor written statement or representation which:

Falsely suggests that the goods are of a particular standard quality, quantity, grade, composition,
style or model;

Falsely suggests that the services are of a particular standard, quantity or grade;

Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new goods.

2.False Offer of Bargain Price-

Where an advertisement is published in a newspaper or otherwise, whereby goods or services are

offered at a bargain price when in fact there is no intention that the same may be offered at that
price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade practice.

The ‘bargain price’, for this purpose means-

the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary
price, or

the price which any person coming across the advertisement would believe to be better than the
price at which such goods are ordinarily sold.
Free Gifts Offer and Prize Schemes

The unfair trade practices under this category are:

Offering any gifts, prizes or other items along with the goods when the real intention is different, or

Creating impression that something is being offered free alongwith the goods, when in fact the price
is wholly or partly covered by the price of the article sold, or

Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill,
with real intention to promote sales or business.

4.Non -Compliance of Prescribed Standards

Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the
goods do not comply with the standards prescribed by some competent authority, in relation to
their performance, composition, contents, design, construction, finishing or packing, as are
necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to an
unfair trade practice.

5.Hoarding, Destruction, Etc.

Any practice that permits the hoarding or destruction of goods, or refusal to sell the goods or
provide any services, with an intention to raise the cost of those or other similar goods or services,
shall be an unfair trade practice.

Q) Agency Theory

[1:14 pm, 06/10/2022] Kalash Khushalani: he 'Agency Theory'

A. Introduction

An agency, in general terms, is the relationship between two parties, where one is a principal and
the other is an agent who represents the principal in transactions with a third party. Agency
relationships occur when the principals hire the agent to perform a service on the principals' behalf.
Principals commonly delegate decision-making authority to the agents

B. Definition

The agency theory is a supposition that explains the relationship between principals and agents in
business. Agency theory is concerned with resolving problems that can exist in agency relationships;
that is, between principals (such as share holders) and agents of the principals (for example,
company executives).

The two problems that agency theory addresses are:

1. the problems that arise when the desires or goals of the principal and agent are in conflict, and
the principal is unable to verify (because it difficult and/or expensive to do so) what the agent is
actually doing; and
[1:15 pm, 06/10/2022] Kalash Khushalani: the problems that arise when the principal and agent
have different attitude towards risk.

C. Features of The Agency Theory

1. The theory provides the fundamental theoretical base of corporate governance

The essence of the theoryis separation of ownership and control.

2. Shareholders as owners of the company set the objectives and acting as the principal appoints the
managers as their agents to pursue their objectives.

3. In Agency theory, managers (agents) run the company on behalf of the Shareholders (Principal).

4. In certain cases the objectives of the managers are different from the shareholders which raise
conflicts in their objectives. This is called as the "agency problem."

D. About the Agency Theory

1. Agency theory is an extension of contractual theory of firm developed by Jense and Meckling
(1976), and Fama and Jensen (1983) wherein a firm is viewed as the nexus of contracts among
different constituents specifying the rights of each agent (manager) in the firm, performingcrietaria,
on which agents are evaluated. And allocation of profits.

2. According to this theory, managers are the agents of the owners, but in reality they acquire
significant control over the funds. Managers use their control right to pursue their personal goals.

N 3. Many times managers are in advantageous position over the owners on account of possession
of the managerial expertise and firm specific knowledge. This position acts as an instrument to gain
control over the firm. A conflict of goals thus occur, as managers pursue actions which benefit
themselves.

4. To resolve the conflicts of interests, certain mechanisms are prescribed in the theory to protect
the interest of the owners :

a) auditing System to limit the self interested managerial behaviour.

'b) Various bonding assurances by the managers that such abuses does not take

place.

c) Changes in organization system to limit the ability of managers to engage in the undesirable
practices.

5. The focus of the theory is on identifying the governance mechanisms to limit the agent's self-
serving behaviour and thus resolving agency problem.

6. The Agency theory assumes that, an effective board comprises of majority of directors, who are
not managers in the company and independent from management. The interest of such directors is
called as outside directors orindependent directors. It is emphasized that independent directors,
lead to superior corporate performance by mitigating the conflict of interest between owners and
managers.
 Module-3

Q) Role of Govt/Auditors/SEBI

If the government demonstrates the good values and ethics through the companies it has

controlling stakes in, it is easier for other private players to emulate. It also gives the

Government credibility when it assesses the compliancy level of other corporates and can

easily press companies to provide adequate explanations for non-compliancy because it

would be walking the talk.

The role of government in corporate governance goes beyond the crafting of rules and

regulations to the active involvement of government in evaluating whether these

regulations are encouraging economic growth, promoting the protection of investors,

shareholders and the public at large.

The government should be in a position to assess if the voluntary corporate governance

codes are bringing sanity to corporates. If the results predict a positive impact then the

government through its various departments has to make it a priority to encourage

corporates to adopt some principles of the over and above other rules and

regulations.

The Government should ensure the ease of doing business by assessing the validity of its

regulations in order to reduce red tapes in the formal sector. Excessive regulations have

created room for corruption and underhand deals which makes the cost of operating

businesses in the country very high.

• Auditors in 1st Sheet

Role of SEBI.

SEBI ensures that the investors do not get be fooled by misleading and false

advertisements. In return, SEBI issued guidelines so as to protect investors and

also ensured that the advertisement is fair and concise.

Regulation of price rigging: Price rigging refers to manipulation of prices by way

of fluctuating the prices with the object of inflating and depressing the market
price of securities.

SEBI make efforts to educate investors so that they are able to make choices

between the offerings of different companies and choose the most profitable

securities.

SEBI has issued guidelines to investigate cases of fraud and insider trading.

E-Trading: Concept of E-trading have been introduced few years back by SEBI to

eliminate the discomfort. It simplifies the process of buying and selling of

securities.

The initial public offering of Primary Market (which is a part of Capital market)

permits through stock exchange.

SEBI promotes training of intermediaries of securities market with the object of

smooth functioning.

Family Business in 1st sheet.

What is a global economy?

The global economy refers to the interconnected worldwide economic activities that take place
between multiple countries. These economic activities can have either a positive or negative impact
on the countries involved.

The global economy comprises several characteristics, such as:

Globalisation: Globalisation describes a process by which national and regional economies, societies,
and cultures have become integrated through the global network of trade, communication,
immigration, and transportation. These developments led to the advent of the global economy. Due
to the global economy and globalisation, domestic economies have become cohesive, leading to an
improvement in their performances.

International trade: International trade is considered to be an impact of globalisation. It refers to the

exchange of goods and services between different countries, and it has also helped countries to
specialise in products which they have a comparative advantage in. This is an economic theory that
refers to an economy's ability to produce goods and services at a lower opportunity cost than its
trade partners.

International finance: Money can be transferred at a faster rate between countries compared to
goods, services, and people; making international finance one of the primary features of a global
economy. International finance consists of topics like currency exchange rates and monetary policy.

Global investment: This refers to an investment strategy that is not constrained by geographical
boundaries. Global investment mainly takes place via foreign direct investment (FDI).

What are the effects of global economy?

Nearly every country in the world is in some way affected by things that happen in what may seem
at times, like unrelated countries - due to the influence of the global economy. A good example of
this is the economic impact that the Brexit vote will have other countries, not only in Europe, but
across the globe. Brexit was referendum decision for the United Kingdom to withdraw from the
European Union (EU).

The main cause of these effects is economics — based on the production and exchange of goods and
services. Restrictions on the import and export of goods and services can potentially hamper the
economic stability of countries who choose to impose too many.

The purpose of international trade is similar to that of trading within a country. However,
international trade differs from domestic trade in two aspects:

The currencies of at least two countries are involved in international trade, so they must be
exchanged before goods and services can be exported or imported;

Occasionally, countries enforce barriers on the international trade of certain goods or services which
can disrupt the relations between two countries.

Scam/Fraud in 1st Sheet.

Measures to overcome Fraud.

Embed an effective fraud prevention strategy: Ensure that there is an approved Fraud Prevention
Strategy, Protected Disclosures Policy, Conflict of Interest Policy, Anti- Bribery and Corruption Policy
and Fraud Response Plan (including cyber-incident response), which are clearly articulated,
implemented and communicated throughout the organisation.

2. Implement a tiered approach: Implement a three-tier approach to reducing fraud and

corruption, which should include essential elements of prevention, response and detection.

3. Effective fraud risk assessments: Initiate on-going Fraud Risk Assessments (including
assessment of cyber-related risks), which are a non-negotiable element of mitigating the risks of
fraud; these should be conducted at an Enterprise and Business Unit level.
4. Optimise the use of technology in detecting fraud: Leverage technology in order to
implement Continuous Control Monitoring measures through Forensic Data Analytics aimed at the
early detection of fraud and corruption risk indicators.

Assessing employee awareness: Conduct an annual online Fraud Health Check survey amongst
employees, which should ideally be anonymous in nature.

6. Eliminating conflicts of interests: Manage the risk of Conflicts of interest through

implementation of an auditable declaration process where all declarations are assessed and verified.

7. Managing relationships with external stakeholders: Discourage/prohibit the receipt of gifts

from suppliers as this alleviates the risk of potential irregularities and furthermore reduces the
administration of any gift register.

8. Know your business partners: Supplier vetting should entail stringent verification and
approval measures, including a Conflict of Interest Declaration.

9. Creating awareness: Fraud Awareness and Anti- Fraud Education should be consistently
applied throughout the organisation and a continuous basis.

Q) Causes and effects irl banking frauds

Poor banking governance: Most frauds show that banks did not observe due diligence, both before
and after disbursing loans. Poor level of checks and balances in the banking system is one of the
reason.

Poor monitoring: Lack of technology and fraud monitoring agencies to detect frauds makes the
problem more complex. There is an absence of an effective mechanism to monitor the credit flow.
Flawed risk-mitigation design, which creates an excessive focus on credit or market risks, but focuses
less on operational risks also leading to more breaches.

Technological backwardness: Excessive dependence on manual supervision, at both external and

internal levels makes it impossible to manually control and supervise the sheer volume of
transactions.

Immoral behaviour: The disintegrating moral fibre of Indian businessmen, bankers and other white-
collar professionals, nepotism in internal committees of banks, unnecessary political interventions
lead to increased frauds.

Political interference: The political pulls and pressures on investigating agencies, and long-drawn
processes of legal system act less as a deterrent.
Impact of Frauds

Bank fraud can have a significant impact on economies. Regulators have no choice but to slap stiff
penalties on the defrauded banks. Economic imbalances caused by bank fraud may cause the stock
market to fall.

As a result of these schemes, there has been a significant economic impact on the stock market. As a
result, the economy deteriorates and foreign investment declines, slowing economic growth.
Following this wild ride, investors from all over the world are scrambling to find safer havens for
their money

A common scam involves depositing black money in a bank in order to convert it to white money.
Bank lending practises are well-known for making loans to individuals and businesses that cannot be
repaid. Banks frequently suffer long-term consequences as a result of these activities. Associate
business executives' fraudulent money transfers to associate offshore banks are also common

When banks fail, the economic impact is greater. Economic factors have a significant impact on
people's daily lives. As a result, non-bank payment methods are becoming more popular than bank
payment methods. As a result, trust is the most important factor in a bank's failure. It would be an
understatement to say that this bank has impacted millions of Indians.

Scams, on the other hand, have become all too common. There was once a stigma attached to
banking because it was only available to India's wealthy, but that has changed dramatically in the
last ten years or so. A bank fraud or failure has a direct impact on the general public's mood.

According to a working paper published by the Indian Institute of Management, India's financial
institutions have lost over 23,000 crore rupees in the last three years and over 61,200 crore rupees
in the last five years due to fraud (IIM). When compared to the INR 83 lakh crore total lending in the
banking system last year, these frauds appear insignificant. Because of their interdependence with
the overall functioning of the economy, "network externalities" are the societal ramifications of bank
failures. Delays in infrastructure projects can be traced back to deceptive strategies such as credit
restrictions.