Question

Explain why ethical behavior is so important in the field of finance.

Answer 1

There have been many scandals and scams in the financial history which has affected the world economy and has time caused recession or crisis. In order to reduce these unethical practices which happen around the globe, we need to emphasize more on the ethic in the financial industry.

The importance of ethical behaviour in the field of finance are as follows:-

1) Ethics help to reduce the scams and scandals, and improve the working standards of the company.

2) It also helps to improve the transparency by providing accurate and correct financial data.

3) Ethical behaviour help to protect the interest of the shareholders, without whom the industry will not work. For this, ethics makes sure that the clients are kept above yourself and the employer.

4) A company having high ethical standards will be preferred by people over the other which is not ethical. Ethical behaviour helps to improve the reputation of the company.

5) Ethical behaviour along with rules and regulation help to guard against unethical behaviour in financial industry. These two together are more effective than one alone.

Therefore alone ethics is not very effective , it has to be complimented with rules and regulation in the field of finance to make it work.