SOLD BY: THE IMPACT OF ETHICS ON THE BANKING INDUSTRY IN NIGERIA
ABSTRACT
This project research is designed to disclose the impact of ethics on the banking industry in our country today. This calls for the principles of right or wrong in human conduct and corporate culture in banking institution. The behaviour as bankers, we must respect the banking Code of conduct, ethical standard and guidelines for the banking Business to be efficient, for the required or intended result or goals to be achieved. In chapter two of this project, opinions of people, banks, and library concerning the ethics on the banking industry were received . Primary and secondary data were generated from the review of various authors, internet, textbooks e.t.c. The research methodology aims at revealing the method used in going about the research, data were collected through observation, Questionnaires and oral interview. Thereafter, the data collected were analyzed; some analysis were adopted to determine how ethics are being operated on the banking sector.It serves as a basis for evaluating the performance of the firm. Finally, the hypothesis formulated were empirically tested by employing the chi square statistical technique.
CHAPTER ONE
1.1 GENERAL OVERVIEW OF THE STUDY
Immediately a company established its objectives, which are acceptable to the society in which it operates, the way in which these objectives are going to be achieved falls within the region of ethics (Babaita, M.A 2009). Ethics comes from the Greek root “Ethos” which originally referred to habitual practices and customs. The concept of character later became a part of its meaning hence ethics can be defined as the study of conduct between individuals in any case, ethics is not a clear concept and therefore has no broadly and generally accepted definition what is important, however, is that it is concerned with what is good or not good, what is normally right or wrong and what is acceptable in a given environmental or not.
On the other hand, ethics is a branch of philosophy which studies the principles of right or wrong in human conduct. To this end, it is considered necessary to mention some of these philosophers namely, Phato, Aristotle, Aguinas Hobbes, Kant Mill and Rawls. Though these philosophers played great roles in the issue of ethics, they could not exactly tell us the origin of ethics. However, taking one of the definitions of ethics which states that ethics is a systematic thinking of right or wrong, good or bad, it will give a picture of the fact that ethics must have come into existence when human race started reflecting on the best way to live societies have developed some kind of morality, usually in the form of customary standards of right and wrong conduct (Philip Toyin, 1998).
1.2 STATEMENT OF PROBLEMS
This research is intended to find out answer to the problems of impact of ethics in banking Industry. Some of the specific problems of these ethics are:
1. Inadequate technical and management training are responsible for the failure of ethics in banking sector.
2. Ethical conducts are not properly I cre n banking industry.
3. Banks lack the knowledge to discover the fundamental value or principles in the life of human being, and they deprive them from fundamental aspects of human nature.
4. Ethics has being lost due to wrong conduct practices.
5. Most banks have deviate from the practice of ethics in the banking industry due to improper of management control.
1.3 OBJECTIVES OF THE STUDY
To achieve the above objectives, the following have to be included.
1. To encourage the rules or code of conduct guiding the banking sector e.g insider trading, fighting in the banking hall, against coming to the office late e.t.c
2. To enhance the methods of delivery on their trading contracts at maturity at agreed rates.
3. To establish the moral standard of human being in the banking industry.
4. To encourage a proper practice of banking ethics to their customers.
5. Banks should alert their customers about the new interest rates that is applicable to their accounts, the basis on which the interest is calculated and when it will be paid to their account.
6. To establish a proper complaints procedure and also to make sure that they are being followed up strictly.
1.4 RESEARCH QUESTIONS
After identifying the problems and the research work is based on the following question:
v How does inadequate techniques and management training be responsible for the failure of ethics in the banking sector?
v Why do most bank deviate from the practice of ethics in the banking industry due to improper of management control?
v Can ethics be lost due to wrong conduct practices?
v Does ethical conduct when not followed properly affect the banking industry?
v Why do banks lack the knowledge to discover the fundamental value of principles in the life of human being, thereby depriving them from fundamental aspect of human nature?
1.5 SCOPE OF THE STUDY
For efficient and effectiveness of this research work to run through, the researcher due to the vast geogiaphical land mark of Nigeria, this study viill only be limited to bank within our country.
1.6 LIMITATIONS OF THE STUDY
This research work is not without limitation these limitations can be broadly classified under three subheadings viz:
a. Human Limitations
b. Time Limitations
c. Material Limitations
Under the human limitations, the attitude of some of the respondents is nothing to write home about, some of them are so signed and doubtful that they would not wait to reJese any form of information to the researchers. Some ever use delay tactics to frustrate the researcher.
Time also played its role, the researcher being a final HND student has a lot of work to do within the short semester. Material limitation played a major role in this work too, this limitation could further be classified under financial and availability of textbooks.
Under financial constraints, the researcher found it really difficult to meet up with the financial demands of this work e.g the cost of visiting the banks was considerable; the cost of production of this work limited the researcher.
Finally, the required textbooks that will give the researcher a strong background were not sufficiently available.
1.7 STATEMENT OF HYPOTHESIS
HO: Effective practice of ethics does not increase the profitability in banking industry.
Ha: Effective practice of ethics increases the probability in banking industry.
Ho2: There is no direct relationship between effective practice of ethics and profitability.
Ha: There is direct relationship between effective p-actice of ethics and profitability.
Ho3: Effective practices of ethics do not enhance the growth in banking industry.
Ha: Effective practice of ethics enhances the growth in banking industry.
1.8 SIGNIFICANCE OF THE STUDY
It is essential that at anytime, a business should be in a position of stabilized solvency i.e. in a position to pay its debts as they arise and in addition take advantage of such business opportunities as reasonable visualized. The significance of this study is made obvious have in so far as the objective of most banks units In this modern world Is titled towards profitability, achieved without efficient management of ethical conduct.
The impact of ethics adds new blood to the streams of banking industry and paves way for growth and survival.
Ethical conduct is embarked upon because of the returns accruing from its inadequate planning and poor management of banks poses a road block to the profitability of banking industry. All banks units work in consonance with the bank philosophy of profit maximization.
Any bank which its citizens have no sense of ethics is a depressing sight. Once a bank ceases to practice the ethical conduct, it is living by the depletion of its assets or on capital unwilling provided by its creditors.
Therefore, practice of ethics is particularly useful and meaningful to large firms more especially, banking industry. The significance of this study, have been seen to be its role on the profitability of the banks.
1.9 DEFINITION OF TERMS
1. ETHICS: This is the moral principles which determine the rightness or wrongness of a particular acts or activities.
2. RIGHTS: This is the ability of doing what is morally good or acceptable or in conformity with law, norm or one’s duty.
3. FAIRNESS: This involves treating people of different background equally by giving each person equal opportunities.
4. CONFIDENTIALITY: This is the ability of an employee to be discreet his dealings with the public in such a manner that he does not reveal official information secrets to outsiders, even in the face of financial inducement or inspite of threats to his life. It is the duty of secrecy which a banker owes his Customer.
5. TRUST: This is the state of one being honest and sincere.
6. MORALS: These are personal beliefs often rooted in religious, traditions, customs and private considerations; they concern the principles of right and wrong.
7. RELIABILITY: This is the ability of one to be able to keep to promising or agreement at all times, even when the unexpected happens.
CHAPTER TWO
2.0 LITERATURE REVIEW
No doubt, a lot of issues have been witnessed in the Nigeria banking industry since the introduction of the structural adjust program (SAP) in 1986. Some of these includes the deregulation of interest rates, withdrawal of accounts of government parastatals from commercial and merchant banks, payment of interest on demand deposit account, capital adequacy requirement and prudential guidelines for licensed banks for reviewed and reporting their performance.
The rationale for these banks regulation rests on the need to protect deposits reallocate credits to socially desirable purposes, prevent discrimination and ensure fairness in the functioning of financial markets and stability within the banking industry due to the unique element of systematic risk in banking and finance (Sanusi, J.O 1997).
These efforts notwithstanding, Nigeria witnessed economics recession in the greater parts of 1980s and this was accompanied by a severe fall in GDP. Arising from this situation, most manufacturers were forced to close shops. This resulted in a distortion of households and firms cash flows, which further culminated in default by of some debt obligations by debtors to their banks.v This therefore constituted a great deal of (mess) to the safety and soundness of banks(Sanusi, J.O 2003).
Financial distress is a phrase commonly employed to describe two distinct but closely relatedstates or conditions of business enterprises.
The two states in the context of the banking industry are insolvency illiquidity. Insolvency in the banking industry refers to a condition in which the sum of a bank’s asset is less than the sum of its liabilities. Capital illiquidity on the other hand describes a bans inability tohonors current customers obligation (Osase and Anao, 1990).
Ethics is a term that refers to a code or moral systems that provide criteria for evaluating right and wrong. Ethics involve issues fundamental to practical decision making. According to Donli, J (2003) “Ethics is the systematic study of conduct based on moral principles, reflective choices and standards of right and wrong conduct”.
Ahmed, K (2003) defines ethics as “the branch of philosophy which deals with the morality of human action or the branch of philosophy which studies the norm of human behavior”. Those who embrace ethics as a way of life acknowledge and accept the fact that they are accountable for their behavior and performance in this case, ethical practices creates not crisis but confidence. Ethical practices therefore remain the forerunner of economics social and welfare recovery.
Ethics in the banking industry is about the practical application of moral standard in banking transactions. It is about values and the application of those values in any given context in the banking arena. A culture in which ethical concern peer mates, the whole banking sector is necessary for value creation as sound values, purpose and practices are the basis for log range achievement.
2.1 DEFINITION OF ETHICS
Ethics is defined by the American heritage dictionary as “the study of the general nature of morals and of specific moral choices, moral philosophy and the rules of standard governing the conduct of the members of a profession.
Taylor (1975) defines ethics as the inquiry into the nature and grounds of morality is taken to mean moral judgment, standards and rules of conducts.
According to Webster’s collegiate dictionary, ethics is defined as the science of moral duty or the science of ideal character, while some writers defined ethics as follows;
Ethics is a systematic thinking about right or wrong, good or bad.
From the various definitions above, ethics is seen as having been behavior as patterned by an environment or society.
Every establishment conceives and lay down what standard of behavior that should be expected of the persons within that establishment. Such, are general rules or canons of ethics. In banking, there is a code of conduct. In the civil service, in the military, in any profession whatever, even in mosques, there standard of behavior expected to prevail in such environment.
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