Question

1. At the beginning of the COVID-19 pandemic, interest rates declined at the central banks but one bank did not pass on the decrease to borrowers citing funding difficulty and shareholder returns as the main reasons. It turns out the CEO of that bank owns 5% of the shares of the bank. Do you think there is an ethical issue surrounding this decision? What might change the CEO’s mind? (200 words)

Answer 1

Yes, I think that there was an ethical issue which has been reflected in this issue because the management of the company has worked for its personal benefit by not passing on to the interest paid to the consumers as when the interest rate has been simplified by the federal reserve, it should have been passed to the general public for beneficial of public interest but this company has operated in its own favour and didnot pass on to the benefits of liberalised interest rate to the public, it can be said that the chief executive officer since he was having the high stakes in the company,he did not want to lose the the market value of shares and since he did not want to lose the value of the Shares, he didnot allow to pass on to the benefits to the customers.

it was a clear case of ethical misconduct and it should not have been done by the manager because this violated the protection of public interest and it is unethical in nature.

chief executive officer should always look for that the interest of various stakeholders to be protected because this company is not working just for the profit maximization, but it is also working for the value maximization of its stakeholders so, the chief executive officer should always be protecting the interest of other shareholders as well.