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Ethics and Finance

Ethics and Finance. Ronald F. White, Ph.D. Professor of Philosophy College of Mount St. Joseph. Introduction. Trust in Financial Institutions Banking Lending money Mortgages Credit cards Financial Services Securities Stocks and bonds. Basic Approaches.

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Ethics and Finance

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  1. Ethics and Finance Ronald F. White, Ph.D. Professor of Philosophy College of Mount St. Joseph

  2. Introduction • Trust in Financial Institutions • Banking • Lending money • Mortgages • Credit cards • Financial Services • Securities • Stocks and bonds

  3. Basic Approaches • Stockholder Theory (Market-Based) • Less governmental regulation • Legality • Stakeholder Theory (Morality-Based) • More governmental regulation • Legality • Morality

  4. Moral Principles • Ethics • Individual behavior- • Bankers, financial advisors, accountants, • Systemic behavior • Instruments- Stocks and Bonds • Practices • Institutions- Banks, securities dealers and brokers, pension funds , accounting firms, mutual funds companies, insurance companies. • systems • Moral Principles • Justice-( Market Fairness) • Merit • Equal Information • Equal Freedom • Liberty- • Utility- • Categorical Imperative (Exploitation)

  5. Classic Issues • Individual and Collective Behavior • Deception (buyer and seller) • Fraud in the Inducement • Manipulation of Stock Prices • Conflict of Interest • agency • Churning • Insider Trading • Arguments in Favor • Arguments Against • Hostile Takeovers

  6. Recent Issues • Mortgage Fraud • Sub-prime loans • Payday Lenders • Credit Card Fees • Bank Bailouts • National Banks • Private Banks • Shareholder Activism • Sisters of Charity

  7. Fairness in Financial Markets • Information • Freedom • Competition • Equal Bargaining Power • Efficient Pricing

  8. Problems • Legality • National v. Global Legal and Moral Standards • Complexity • Monitoring and enforcement of standards • Effectiveness of governmental regulators • Securities and Exchange Commission • Federal Reserve • Federal Trade Commission • Effectiveness of Global Regulators • World Bank • Effectiveness of private regulators • Independent Auditors • Cost of monitoring and enforcement • Morality • National and Global Moral Standards

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