Ethics at the Individual Level | PAPER II – PRINCIPLES & PRACTICES OF BANKING | MODULE D: ETHICS IN BANKS AND FINANCIAL INSTITUTIONS

Ethics at the Individual Level

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1. Values, Norms, Beliefs and Their Role

Values are deep-seated beliefs that guide behavior and decisions. Norms are shared expectations of behavior within a society or group, while beliefs are convictions that individuals hold to be true. Together, they form the ethical foundation of individuals and influence actions in professional environments like banking.

Example: A banker may value honesty (value), believe that transparency builds trust (belief), and follow the bank’s code of conduct (norm).

2. Core Values: The Value of a Value

Core values like integrity, responsibility, and fairness serve as internal compasses. They are non-negotiable and define personal and organizational identities.

Illustration: If Integrity (I) and Responsibility (R) are each scored 1, the Ethical Strength (ES) of a person can be a simple function:
ES = I + R
If both are present: ES = 1 + 1 = 2; if either is missing, ES declines.

3. Morality and Personal Values

Morality is the differentiation of intentions, decisions, and actions between good and bad. Personal values determine the moral choices one makes.

Example: Refusing a bribe even when no one is watching reflects strong moral character derived from personal values.

4. Value Conflicts: How Should I Live?

Value conflicts arise when two equally important values clash. Resolving them requires prioritizing and critical thinking.

Example: A loan officer values both compassion and fairness. When dealing with a defaulting borrower, they must decide between giving an extension (compassion) or enforcing recovery (fairness).

5. Personal Ethics and Business Ethics

Individual integrity forms the basis of ethical behavior in business. Business ethics depend on the consistency of personal ethics among employees.

6. The Golden Rule

"Do unto others as you would have them do unto you" — this principle promotes empathy and respect in business relationships.

7. Understanding Right and Wrong

Ethics helps individuals distinguish right from wrong based on rational analysis and consequences.

8. Ethical Reasoning and Real-World Application

Ethical reasoning involves logical thinking based on ethical principles. It is essential in making sound business decisions.

Example: A banker evaluating whether to approve a risky loan may reason: "If I ignore due diligence, it might benefit this customer now but endanger the bank later."

9. Ethical Dilemmas

Ethical dilemmas occur when no option seems entirely right. They test personal ethics and decision-making ability.

10. Framework of Ethical Decision-Making

A widely used framework includes:

1. Recognize the ethical issue
2. Get the facts
3. Evaluate alternatives
4. Make a decision and test it
5. Act and reflect on the outcome

MCQs: Ethics at the Individual Level

1. Which of the following best defines a “value”?
   a) A regulation
   b) A legal rule
   c) A deep belief that guides actions
   d) A bank procedure
   
   Answer: c
2. What does the Golden Rule advocate?
   a) Maximize profits at any cost
   b) Follow rules strictly
   c) Treat others as you wish to be treated
   d) Avoid all risks
   
   Answer: c
3. Morality is most closely aligned with:
   a) Market strategy
   b) Legal codes
   c) Sense of right and wrong
   d) Technology
   
   Answer: c
4. A conflict between honesty and loyalty is an example of:
   a) Ethical harmony
   b) Value conflict
   c) Legal dilemma
   d) Misconduct
   
   Answer: b
5. What does ethical reasoning involve?
   a) Financial planning
   b) Logical application of ethical principles
   c) Legal enforcement
   d) Marketing decisions
   
   Answer: b
6. Which of these is NOT a step in ethical decision-making?
   a) Ignoring facts
   b) Recognizing the issue
   c) Evaluating options
   d) Reflecting on outcome
   
   Answer: a
7. Personal ethics influence business ethics through:
   a) Corporate law
   b) Individual integrity
   c) Market conditions
   d) Advertising
   
   Answer: b
8. Which of the following is a “norm”?
   a) A legal act
   b) A corporate profit
   c) An expected behavior in society
   d) A tax rate
   
   Answer: c
9. The equation ES = I + R symbolizes:
   a) Emotional Stability
   b) Ethical Strength based on Integrity and Responsibility
   c) Economic Survey
   d) Employee Salary
   
   Answer: b
10. Ethical dilemmas are situations where:
    a) Both choices are legally wrong
    b) No decision is necessary
    c) Two ethical principles conflict
    d) Market conditions are bad
    
    Answer: c