MANDEEP SINGH

MBA II
SECTION D
5911
What are ethics?
 "Ethics represents the attempt to resolve the conflict
between selfishness and selflessness; between our
material needs and our conscience."

 Ethics in general is concerned with human behavior

that is acceptable or "right" and that is not
acceptable or "wrong" based on conventional
morality.
 Ethical norms are essential for maintaining stability
and harmony in social life, where people interact
with one another.
Finance
 Finance is the science of funds
management. The general areas of
finance are business finance, personal
finance, and public finance.
 Finance includes saving money and often
includes lending money. The field of
finance deals with the concepts of time,
money, risk and how they are
interrelated.
 It also deals with how money is spent and
budgeted.
 Ethics and Finance
 Finance is often mistaken to be a discipline free from
ethical burdens. However, frequent economic meltdowns
that could not be explained by theories of business
cycles alone have brought ethics of finance to the
forefront.
 Finance ethics is overlooked for another reason–issues in
finance are often addressed as matters of law rather
than ethics. Looking closer into literature concerning
finance ethics, one can be convinced that as the case
with other operational areas of business, the ethics in
finance too is being called into question
Ethical Dilemmas in Finance
 Modern Financial-Economic Theory
 Principal-Agent model of Relationship
Solution of Problem
 Ethical Violations
 Insider trading
 Stakeholder interest versus customer
interest
 Investment management
 Campaign financing.
Ethical Codes

 Security and Exchange Board of India

(SEBI)
 Securities and Exchange Commission
(SEC)
 Reserve Bank of India (RBI)
Code of Ethics for Senior Officers
and Finance Associates

 Act with honesty and integrity, avoiding

actual or apparent conflicts of interest in
personal and professional relationships.
 Provide information that is full
 Comply with all applicable laws
 Respect the confidentiality of
information
 Proactively promote ethical behavior
 Ethical Finance
 Ethical finance is about investing in socially
responsible companies, i.e. those taking ethical,
social, and environmental values into account
when formulation corporate strategy.
Today’s Scenario
 In the US, $2 trillion are now invested
in socially responsible companies.
 In Europe, the corresponding figure is
€500 billion,
 In Italy €3 billion.
 There are 450 ethical funds in Europe
and the number is continuously
growing.
Continued……………………
 The ethical finance is growing at healthy rates
(it has grown by a cumulative 42% over the
last ten years).
Ethics and Finance: Time for
Introspection
Financial Crisis and Ethics
 Great depression
 Banking frauds
 Economics meltdown
 Major corporate frauds
How aware is the investor?
Conclusion
 At the present time, the field of finance
ethics is barely formed. Although
standard business ethics courses give
some attention to ethical issues in
finance, few finance departments include
a treatment of ethics in their courses.
Interest in finance ethics is growing,
however, and many people in finance
believe that ethics should receive some
attention in finance education.
Thank you
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