Arab Today, arab today banking culture creates the crooks
Last Updated : GMT 18:11:48
Arab Today, arab today
Arab Today, arab today

Banking culture creates the crooks

Arab Today, arab today

Arab Today, arab today Banking culture creates the crooks

London Stock Exchange
Paris - AFP

A cesspool of fraud and lies in the banking industry has come to light since the financial crisis of 2008, raising questions about how such rogue behaviour could have happened.
What caused traders, asset managers and others in the money business to behave dishonestly?
And how can dodgy behaviour be curbed?
Scientists at the University of Zurich in Switzerland conducted an unusual psychology experiment to find out.
Their results provide the first objective data for anecdotal evidence that the risk of fraud is rooted in a bank's culture -- and changing it may be painful.
"Our results suggest that the social norms in the banking sector tend to be more lenient towards dishonest behaviour and thus contribute to the reputational loss in the industry," said Michel Marechal, a professor of experimental economic research.
In research reported in the journal Nature on Wednesday, the team recruited 128 employees from a large international bank and 80 from other banks.
On average, the employees had 11 and a half years' banking experience.
About half worked in core businesses like share trading, private banking or asset management, and the rest in support units such as human resources.
The scientists prepared an intriguing barometer of honesty.
In their trial, each volunteer was asked to flip a coin 10 times and report the outcome online.
If it concurred with a pre-programmed choice of head or tails, there was a reward each time of $20 (16 euros).
But before each toss, the banker was tipped off about what the outcome would be. Whether he or she chose to report it faithfully was the test.
In a move meant to mimic the competitive nature of the banking profession, the trialists were also told they could only collect their winnings if they outperformed another, randomly-chosen participant.
Before the experiment began, the volunteers were divided into two groups.
A "control," or comparison, group was asked about their everyday life and wellbeing, while the test group were questioned about their work.
One group was asked, for example: "How many hours per day do you watch television on average?" and the other: "What is your function at this bank?"
The point was to prime the second group to enter the experiment with a banker's focus.
The outcome pointed to a stark difference in honesty, driven by a sense of professional identity, according to the research paper.
The "control" group reported winning coin flips in 51.6 percent of cases, close to a benchmark 50 percent -- the one-in-two statistical probability of predicting a tossed coin.
In the "primed" group, though, 58.2 percent of tosses were claimed as winners --  a number "significantly above chance", said the paper.
The authors calculated that about 16 percent of the "control group" had cheated at least once, compared to 26 percent in the other.
The team believed the phenomenon was specific to bank employees.
They repeated the experiment with two groups of non-bankers -- workers and students -- whose honesty levels did not change when their professional identity was "primed".
- Changing culture -
"The prevailing business culture in the banking industry favours dishonest behaviour," the study authors said -- with fraud the likely outcome.
"The prevailing business culture in the banking industry weakens and undermines the honesty norm, implying that measures to re-establish an honest culture are very important," said the team.
Fixing the problem, though, could mean radical and unsettling choices like scrapping bonuses derived from dishonest behaviour, the scientists suggested.
There could also be an oath of ethics, similar to the Hippocratic oath taken by doctors.
"Such an oath, supported by ethics training, could prompt bank employees to consider the impact of their behaviour on society rather than focusing on their own short-term benefits," the paper said.

 

arabstoday
arabstoday

GMT 05:41 2017 Tuesday ,23 May

Tadawul index stays almost flat

GMT 20:24 2017 Saturday ,20 May

US Stocks Close Higher

GMT 17:28 2017 Thursday ,18 May

Saudi stocks rise in heavy trading

GMT 21:37 2017 Wednesday ,17 May

US Stocks Close Mixed

GMT 04:58 2017 Wednesday ,17 May

Tadawul index gains 0.7%

GMT 06:20 2017 Tuesday ,16 May

Tadawul index climbs 0.6%

GMT 13:43 2017 Monday ,15 May

Oman share index declines marginally
View News in Arabic - Business: أسواق مالية
Arab Today, arab today
Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today banking culture creates the crooks Arab Today, arab today banking culture creates the crooks

 



Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today banking culture creates the crooks Arab Today, arab today banking culture creates the crooks

 



Arab Today, arab today France defies terrorism through tourism

GMT 15:18 2017 Saturday ,20 May

France defies terrorism through tourism
Arab Today, arab today Mai Al-Jeddawi presents décor ideas for Ramadan
Arab Today, arab today Sally Shaheen considers hosting a political show

GMT 05:41 2017 Tuesday ,23 May

Tadawul index stays almost flat

GMT 20:24 2017 Saturday ,20 May

US Stocks Close Higher

GMT 17:28 2017 Thursday ,18 May

Saudi stocks rise in heavy trading

GMT 21:37 2017 Wednesday ,17 May

US Stocks Close Mixed

GMT 04:58 2017 Wednesday ,17 May

Tadawul index gains 0.7%

GMT 06:20 2017 Tuesday ,16 May

Tadawul index climbs 0.6%

GMT 13:43 2017 Monday ,15 May

Oman share index declines marginally
View News in Arabic - Business: أسواق مالية
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday