The Ethics of Banking (eBook)

Conclusions from the Financial Crisis

Peter Koslowski (Autor)

eBook Download: PDF

2011 | 2011
XV, 214 Seiten
Springer Netherland (Verlag)
978-94-007-0656-9 (ISBN)

Infos

The Ethics of Banking analyzes the systemic and the ethical mistakes that led to the crisis. It keeps the middle ground between excusing all failures by the argument of a systemic crisis not to be taken responsibility for by the financial managers and the moralistic reproach that only moral failure is at the origin of the crisis. It investigates the role of speculation in the formation of the crisis and distinguishes between productive speculation for hedging and for securing market liquidity on the one hand, and unproductive and even detrimental hyper-speculation going far beyond of the degree of speculation that is necessary in a developed economy for the liquidity of financial markets, on the other hand. Hyper-speculation has increased the risks of the financial system and is still doing so.

Inhalt

Preface 6
Introduction: Is the Finance Industry Ethically Irrelevant? 7
Contents 11
Part I Foundations of Business and Finance Ethics 16
1 Ethical Economy, Economic Ethics, Business Ethics: Foundations of Finance Ethics 18
Purely Economic Economics Versus Ethical Economy 18
The Justification of Ethical Duties from the Nature of the Matter 20
Business Ethics and the Fiduciary Duties of the Manager 24
Part II The Ethical Economy and Finance Ethics of the Markets for Credit, Capital, Corporate Control, and Derivatives 29
2 The Ethical Economy of the Credit Market 30
Purpose and Task of the Credit Market 30
The Purpose of the Bank for Deposit Customers, as the Bank's Creditors 31
The Purpose of the Bank for Credit Customers, as the Bank's Debtors 32
Task of the Bank: Intermediating Between Its Creditors and Debtors 32
Schuldverhältnisse: Relationships of Schuld, of Guilt, Debt, or Obligation. Excursus with Reference to an Equivocation in the German Language 34
Task of the Bank: Transforming Time Periods and Bearing Risk 36
Duties of Banks Arising from the Nature of Their Tasks to Facilitate Payments and to Enable Credit 37
Duties Arising from the Bank's Task to Facilitate Payments and Safeguard Liquid Funds 37
Duties Arising from the Task of the Bank to Transform Deposits into Loans 39
3 The Ethical Economy of the Capital Market 43
The Globalization of the Capital Market 43
Globalization Extends the Simultaneity of Space and Compresses the Non-Simultaneous Nature of Human Time 43
Globalization of the Capital Market as the Driver of Globalization of the World 44
Values and Valuations in the Capital Market 46
Which Values Should Determine the Actions of Financial Intermediaries in the Capital Market? 49
On the Ethics of Financial Consulting 51
The Tasks of the Capital Market and the Duties of the Participants in the Capital Market 52
Speculation and Finance Ethics 57
The Functions of Speculation in the Capital Market: Bearing Uncertainty and Risk as Well as Enabling the Division of Labor Between Calculation and Speculation 58
4 Insider Knowledge and Insider Trading as Central Problems of Finance Ethics 62
Insider Trading as Pseudo-Speculation and Agiotage 64
Arbitrage, Speculation, Agiotage 65
Insider Trading and the Fiduciary Relationship 66
Insider Trading as Perverse Incentive 68
Insider Trading and Short-Termism 69
Insider Trading and the Duty of Ad Hoc Publicity 69
Detrimental Effects of Insider Trading on Allocation, Distribution, and Stability 70
Experiences After the Entry into Force of the Laws Against Insider Trading in Germany 72
The Abuse of Insider Knowledge as a Form of Corruption 74
Ethical Duties of the Investor and of the Firm Quoted on the Capital Market 78
5 The Ethical Economy of the Market for Corporate Control and for Corporate Know-How 81
Hostile and Friendly Takeovers: The Finance Ethics of Corporate Control and Corporate Takeovers 81
Mergers and Acquisitions: The Capital Market as a Market for Corporate Knowledge and Know-How 84
Hostile and Friendly Takeovers and the Importance of the Global Competition Between Management Teams 85
Corporate Governance by Self-Control Through Stakeholder Consensus, and Corporate Governance by Competition from Outsiders: The German and the Anglo-American Model of Corporate Governance 87
6 The Ethical Economy of the Market for Derivatives: Trading with Values Derived from Other Values for Hedging, Speculation, and Arbitrage 92
Futures and Options: Non-Conditioned and Conditioned Forward Transactions 94
Variants of Derivatives: Futures, Options, Swaps, Structured Finance and Investment Products 95
Non-Conditioned Futures and Forwards 96
Conditioned Futures: Options 96
Swaps: A Sequence of Forwards or Options 96
Interest Rate Swaps 97
Credit-Default Swaps 97
The Collateralized Debt Obligation as a Structured Finance Product and an Instrument of Credit Enhancement 98
The Functions of Speculation in the Derivatives Market: Enabling the Division of Labor Between Hedging and Speculation 101
7 Interdependences Between the Financial Markets for Credit, Capital, and Derivatives, and the Challenges the Financial Markets Pose for Ethics 105
A Capital Market Within Banks in Bank-Controlled Industries: The Corporatist Model 105
The Information and Influence Asymmetry Between Banks and Manufacturing Firms: Banks as Monitors of Their Debtors' Firms 107
The Intangibility of the Merchandise Traded in Financial Markets as an Ethical Problem 108
8 The "Banking Secret", the Right to Privacy, and the Banks' Duty to Confidentiality 112
The Protection of Facts Communicated Under Confidentiality 112
Banking Secrecy, the Investigation of Tax Avoidance, Tax Evasion, Money Laundering, and the Discussion Around the Swiss "Banking Secret" 113
Banking Secrecy, the Right to Privacy, and the State: Thoughts on Political Philosophy 120
The Dualism of Private and Public, of Society and State 120
Protection of the Distinction Between Private and Public as a Consequence of Skepticism About Humans as Political Beings 122
Part III Financial Wagers, Hyper-Speculation, Financial Overstretch: The Financial Market Crisis of 2008 124
9 Financial Wagers, Hyper-Speculation and Shareholder Primacy 125
Wager or Gambling: What Is Speculation? 125
The Productive or Knowledge-Increasing Financial Wager 127
The Productive and the Unproductive Wager on Derivatives 128
The Gambling Wager: Chance-Driven Betting for Fun or Good Fortune 129
The Power of Gambling over Humankind in the Epic Mahabharata 130
Wagers and Gambling in Cultural Theory 131
Wagers and Gambling in Civil Law and Economic History 133
The Continuum from the Wager on Corporate Strategy and the Wager on Technological Development to the Gambling Wager: The Difference Between the Value-Creating and the Non-Value-Creating Wager 135
The Functional and the Dysfunctional Extent of Financial Wagers on Derivatives 136
The Principle of Shareholder Primacy and Hyper-Speculation 138
Why Was the Shareholder-Value Criterion Elevated to Primacy as the Corporate Purpose? 140
Shareholder Value as the Control Instrument of the Firm 141
The Product as the Purpose of the Firm 143
The Dominance of the Shareholder-Value Orientation and the Holding Structure of the Firm 145
Perverse Incentives from Shareholder Primacy: Speculation Instead of Production 146
The Inversion of the Control Instrument of Shareholder Value to the Purpose of the Firm, and the Role of the Employee in the Firm 148
Does the Shareholder-Value Principle Lead to a Fusion of Shareholder and Manager Interests? 149
10 Financial Overstretch: The Epochal Disturbance of the Invisible Hand of the Market by the Financial Industry 153
The Disturbance of the Compatibility of the Acting Person's Aim with the Firm's Aim 153
Hyper-Incentivization and the Hubris of the Financial Manager 154
Easy Credit and the Hubris of the Consumer 161
Credit and Credo, Economic Success and “Manifest Destiny” 164
Separating the Financial Services from the Value Creation for the Customer: Self-Dealing of the Banks as Shady Dealings 168
The Financial Market Crisis as a Crisis Caused by Excessive Trust: Credit Enhancement and Excesses of Trust 169
Conflicts of Interests and Conflicts of Disinterest: Having an Interest in Credit Enhancement and No Interest in the Monitoring of It 172
From Big Bang Deregulation to Big Bailout, or: How Deregulation Ended in the Largest State Bailout of Banks in History 173
After the American Financial Overstretch -- Have We Reached the End of the Washington Consensus? 178
The Failure of Economics and Management Science 182
"Wealth in the Hands of Others": The Outsourcing of Asset Management and the Growth of Financial Intermediation as Causes of the Financial Crisis 185
On the Way to Lesser Inequality in Wealth Distribution? Distributional Effects of the Financial Crisis Towards Greater Equality 188
The Financial Crisis -- Systems Crisis or Action Crisis? 189
The Way Out of Financial Crises 195
References 202
Name Index 215

Produkt-Details

• Erscheint lt. Verlag: 20.4.2011
• Reihe/Serie: Issues in Business Ethics
• Reihe/Serie: Issues in Business Ethics
• Zusatzinfo: XV, 214 p.
• Verlagsort: Dordrecht
• Sprache: englisch
• Themenwelt: Geisteswissenschaften ► Philosophie ► Ethik
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Themenwelt: Betriebswirtschaft / Management ► Spezielle Betriebswirtschaftslehre ► Bankbetriebslehre
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Unternehmensführung / Management
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre
• Schlagworte: Banking • Banking Crisis • Banking Derivatives • Banking Ethics • banking regulation • Business Ethics • Corporate Governance • Corporate Social Responsibility • CSR • Derivatives • Economic Meltdown • Financial Crisis • Financial derivatives • Financial Turmoil • Global Banking Crisis • Greed • Hyper Speculation • Hyper-Speculation • Socially Responsible Investment • SRI • Wealth
• ISBN-10: 94-007-0656-1 / 9400706561
• ISBN-13: 978-94-007-0656-9 / 9789400706569