Ethical Issues in the Banking Industry (Coursework Sample)
In this task i was required to provide answers to the provided exercise questions and discuss a case study.
source..
Ethical Issues in the Banking Industry
Name
Institutional Affiliations
In the modern world, banks play an important role in a well-functioning system. They are involved in the borrowing and lending of money. Given the vital role that banks play, it is important we consider the ethical issues that surround the industry, especially given what happened during the financial crisis of 2007-2008. They include fractional reserve banking ethical issues, predatory lending, securities fraud, and faulty foreclosure practices. Below is a discussion of these issues, their importance; how they can be dealt with; why leaders have failed to do so; and the impact that addressing the issues could have on profitability.
* Fractional Reserve Banking Ethical Issues
One of the activities that define modern banking systems is fractional reserve banking. It is the traditional concept of banking. Customers deposit their money into banks and earn interest from it. The bank then uses a portion of it for investment activities (Bagus & Howden, 2013). For example, it may lend out the money to other customers at a higher interest rate, earning a profit in return. The reason why this is referred to as fractional reserve banking is the bank does not lend out all the money deposited; it keeps a fraction of it. Customers can withdraw their money whenever they need it and this raises one of the ethical issues surrounding fractional reserve banking. Sometimes, a large number of customers might decide to withdraw their money from a bank due to various reasons such as lack of confidence in the institution due to concerns over solvency. In such a situation, the bank may not be in a position to fulfill its contractual obligation to repay depositors their funds when they request it.
Fractional reserve banking also facilitates risky lending. Some banks engage in risky gambles and do not always get back the money they lend out and this results in losses. The losses increase the risk of the depositors losing their money. The Federal Deposit Insurance Corporation was established to assure depositors they would not lose
Other Topics:
- Accounts Analysis: The U.S Energy Corp & DTE Energy CODescription: The U.S energy Corp was organized in 1966 as an independent energy company. The main activity is to acquire and develop natural gas and oil in the U.S. The company deals with gas and oil projects and the interest of working may change according to the change of project lease the operation contract....6 pages/≈1650 words| 4 Sources | APA | Accounting, Finance, SPSS | Coursework |
- Cash flow statement analysis Accounting, Finance, SPSS CourseworkDescription: The income statement is made up of revenue and expenses alongside the subsequent net gain or deficit over some stretch of time due to acquiring exercises. The income statement shows speculators and the board if the firm brought and generated cash during the period announced....11 pages/≈3025 words| 9 Sources | APA | Accounting, Finance, SPSS | Coursework |
- Taxation theory, practice and law Accounting, Finance, SPSS CourseworkDescription: The roots of Pablo are Portuguese though he works in Australia. The payment to Pablo was made in his Portuguese bank account. He earned revenue of $120,000 in the year. The taxation intent considers various variables which are related to identification of a citizen who is foreigner or resident....10 pages/≈2750 words| 14 Sources | APA | Accounting, Finance, SPSS | Coursework |
