This paper develops an ethical framework for responsible finance and then applies it to Citigroup (Citi), a major financial actor in the microfinance sector, to see whether it meets with such obligations. The framework consists of two categories of responsibility. The first category is the special social responsibility of financial institutions; and the second is the fundamental principles of ethical behavior in financial services. From Citigroup’s microfinance model, scope of business, and multiple roles in the market, the company (...) seems to be fulfilling its responsibility in inclusive finance. However, judged in term of the principles of integrity, objectivity, fairness, professionalism, and diligence, it falls short of its ethical responsibility. In view of this shortcoming, Citigroup should recall its obligation to avoid conflicts of interest, to provide responsible advice, to protect clients from over-indebtedness, and most importantly, to act with integrity. (shrink)

This book provides a rich collection of essays discussing and showcasing the transformation of businesses around the world towards sustainability and responsibility. Based on a framework of global theoretical approaches, it presents practical examples and cases from a variety of industries, regions and corporate functions. It also highlights the latest insights on how corporations consider sustainability in the governance of their respective organization. Furthermore, the book features a section dedicated to responsible finance, and outlines business and management-driven approaches (...) that contradict the traditionally held belief that a trade-off exists between sustainability, social responsibility and profit. (shrink)

Finance is grease to the economy. Therefore, we assume that it may affect corporate social responsibility (CSR) and the sustainability of economic development too. This paper discusses the transmission mechanisms between finance and sustainability. We find that there is no simple one-to-one relationship between financial development and sustainable development but there are various – often indirect – linkages. It appears that most of the literature concentrates on the role of public shareholders when it comes to changing corporate policy (...) and performance in a more sustainable direction. However, this focus neglects the potential impact of the credit channel and private equity on a firm’s non-financial policies and performance. These very powerful mechanisms can govern business policies and practices. Therefore, there appears to be much more scope for finance to promote socially and environmentally desirable activities and to discourage detrimental activities than has been acknowledged in the academic literature so far. (shrink)

This paper examines the rise of socially responsible investment (SRI) as a sustainable finance mechanism and discusses the potential of SRI to contribute toward a more socially responsible and environmentally sound model of commerce in the Asia-Pacific region. Using a case study approach, I argue in this paper that the potential of SRI to accelerate the private sector toward greater sustainability has been to date largely explored within the North American and European regional contexts and that the (...) future global development of SRI is likely to depend on whether and to what degree SRI becomes a viable financial instrument in industrialized (Japan) and emerging (Hong Kong/China) economies of the Asia-Pacific region. (shrink)

In response to our critics, we clarify and defend key ideas in the report Open and Inclusive: Fair Processes for Financing Universal Health Coverage. First, we argue that procedural fairness has greater value than Dan Hausman allows. Second, we argue that the Report aligns with John Kinuthia’s view that a knowledgeable public and a capable civil society, alongside good facilitation, are important for effective public deliberation. Moreover, we agree with Kinuthia that the Report’s framework for procedural fairness applies not merely (...) within the health sector, but also to the wider budget process. Third, we argue that while Dheepa Rajan and Benjamin Rouffy-Ly are right that robust processes for equal participation are often central to a fair process, sometimes improvements in other aspects of procedural fairness, such as transparency, can take priority over strengthening participation. Fourth, while we welcome Sara Bennett and Maria Merritt’s fascinating use of the Report’s principles of procedural fairness to assess the U.S. President’s Emergency Plan for AIDS Relief, we argue that their application of the Report’s principle of equality to development partners’ decision-making requires further justification. (shrink)

The financial services sector has the potential to be an important driver for improved corporate social and environmental responsibility through its control over corporate financing. But, so far, only ad hoc policy initiatives have arisen in the European Union and other countries. Because the financial services sector is where wholesale decisions regarding future development, and thus pressures on the environment, arise, the reform of investment and banking services to promote long term investment and better consideration of environmental impacts may be (...) an effective way to promote sustainable development. Reforms such as corporate environmental reporting requirements and lender liability for borrowers’ environmental harm, are some of the ways by which an institutional framework for mobilising financial organizations as instruments of environmental regulation could be constructed. (shrink)

Buchanan highlighted the inconsistencies that arise when public services are financed by general taxation. Citizens increase their demand for services, even though citizens are reticent to increase taxation. Buchanan invited readers to explore the impact of different assumptions of politicians’ behaviour. In this chapter, attention focuses on the way that vote maximising governments are likely to respond to the divorce between receipt and payment for services. Buchanan illustrated his analysis with reference to the National Health Service in the UK. Predictions (...) are tested with reference to the pattern of excess demand in the National Health Service between 1970 and 2012. (shrink)

L'espace économique s'est profondément modifié au cours des vingt dernières années en raison, bien sûr, de la mondialisation, niais aussi de la déréglementation de nombreuses économies parmi les plus influentes du monde. D'une économie empirique de travail, nous sommes ainsi passés à une économie virtuelle de spéculation avec, à la clé, un recul de l'éthique au profit de logiques financières. C'est pour contrer les effets néfastes de cette financiarisation de l'économie que le mouvement de la finance socialement responsable s'est (...) développé, ses tenants utilisant les leviers économiques, en l'occurrence de nombreux fonds de placement, pour faire pression sur les décideurs et les orienter vers des avenues plus responsables. Ce livre présente le regard d'un philosophe et d'une sociologue sur ce mouvement. Les auteurs définissent les origines de la finance socialement responsable, pour ensuite exposer ses pratiques et ses stratégies, dresser un portrait de ses principaux acteurs et proposer des pistes de réflexion sur la dimension éthique de la finance ainsi que des outils pertinents aux pratiques des financiers. Il s'agit d'une introduction indispensable à tous ceux qui souhaitent s'initier au mouvement de la finance socialement responsable et qui recherchent des avenues éthiques en matière de développement économique. (shrink)

What does socially responsible investing (SRI) accomplish for investors and for society? Proponents of SRI claim that the practiceyields competitive portfolio returns for investors, while at the same time achieving better outcomes for society at large. Skepticsview SRI as ineffective at best and ill-conceived marketing hype at worst. My objective in this paper is to apply mainstream finance research findings to the question of whether SRI may be expected to lead to superior social outcomes. I conclude that under (...) the perfectmarkets assumptions underlying most finance theory, SRI will not affect social outcomes. However, given well documented imperfections in equity markets, the claim that SRI “makes a difference” to society is a reasonable one that is consistent with current theoretical and empirical research in finance. (shrink)

’Although the empirical and conceptual underpinnings of New Finance have been rigorously tested, its ethical underpinnings have not been explored.’These are seen to derive from the social remoteness of late twentieth century individualism, which needs to be countered by sensitivity to the social context of finance and to the developmental nature of ethical behaviour. The author is Fellow in Finance at Templeton College, Oxford.

Financing Public Schools moves beyond the basics of financing public elementary and secondary education to explore the historical, philosophical, and legal underpinnings of a viable public school system. Coverage includes the operational aspects of school finance, including issues regarding teacher salaries and pensions, budgeting for instructional programs, school transportation, and risk management. Diving deeper than other school finance books, the authors explore the political framework within which the schools must function, discuss the privatization of education and its effects (...) on public schools, offer perspectives regarding education as an investment in human capital, and expertly explain complex financial and economic issues. This comprehensive text provides the tools to apply the many and varied fiscal concepts and practices that are essential for aspiring public school administrators who aim to provide responsible stewardship for their students. (shrink)

Devant des enjeux économiques et écologiques majeurs, les sociétés comme le Québec font face aujourd’hui à une exigence forte de transition écolo­gique de leurs structures économiques et énergétiques. Parmi l’ensemble des ques­tions d’ordre pratique soulevées par cette transition, celle qui a trait à son financement est l’une des plus épineuses. Dans le contexte actuel, où les finances publiques sont exsangues et où les fonctions économiques de l’État sont en redé­finition, des innovations permettant de mobiliser l’épargne capitalisée dans les fonds privés (...) seront vraisemblablement appelées à contribuer à la transition qui s’amorce. Ces innovations, qui peuvent tirer profit des apports de la finance res­ponsable, sont basées sur un élargissement de l’horizon d’investissement, tant sur la durée que sur le processus d’analyse des choix de placement. Cet élargissement des perspectives permet aux épargnants et aux gestionnaires de fonds de reconsi­dérer les externalités importantes d’un modèle de croissance à haute intensité carbonique et de soutenir la transition écologique. (shrink)

The shareholder wealth maximization objective for corporate management can be a very effective tool for decision making. However, it can also be used to rationalize the commission of unethical or socially irresponsible actions. Overemphasis on the SWM objective by some companies can lead to dangerous or disastrous consequences for consumers, employees, or the general population. Even so, issues of business ethics and social responsibility (BE-SR) are almost totally ignored in corporate finance textbooks. If the typical coverage of corporate (...) class='Hi'>finance courses is represented by these textbooks, then financial educators are abdicating their responsibility to help prepare future corporate managers to recognize and deal with BE-SR issues effectively. (shrink)

La finance peut-elle être au service de l'homme? Les cyniques diront que, si cela arrive, c'est involontairement. L'image de la finance est celle d'organismes froids, uniquement motivés par le gain. La crise de 2008 a jeté un coup de projecteur violent sur des pratiques contestables et collectivement nuisibles. Est-ce là toute la réalité de la finance? Est-ce une fatalité? La finance a un rôle central dans nos économies. Une finance au service de l'homme, et non (...) pas centrée sur elle-même, serait évidemment un idéal. Peut-on cependant avoir une finance orientée dans le bon sens sans se référer aux valeurs qui animent une société? Et que signifie être au service de l'homme, sinon avoir une conception définie du bien, et donc une forme de morale ou d'éthique? Ethique et finance : c'est par là qu'il faut commencer l'examen. Pour examiner la question de la façon la plus concrète possible, l'auteur aborde aussi la question de la banque et des marchés financiers, sans oublier la finance publique, et même le rôle du don. Un ouvrage indispensable pour comprendre l'articulation de la régulation des marchés et de l'éthique personnelle et une claire démonstration des conditions indispensables pour prétendre à la possibilité d'une finance au service de l'homme. (shrink)

Addressing the productivity challenge of climate technology (ClimTECH) firms and avoiding the “green trap” is crucial for decoupling economic growth from carbon emissions and achieving sustainable development. This study uses the establishment of green finance reform and innovation pilot zones as a quasi-natural experiment and employs a difference-in-differences model to explore the impact of green finance policies on the total factor productivity (TFP) of ClimTECH firms and its spillover effects. The results show that (1) Green finance policies (...) significantly increase TFP, especially in state-owned firms, firms that actively disclose environmental information, firms led by long-tenure CEOs, and those in regions with strong intellectual property protection. (2) The channel analysis shows that green finance policies enhance firms' TFP by easing financing constraints, encouraging green technology improvements, and improving capital allocation efficiency. (3) The spillover effect analysis shows that the TFP increase driven by green finance policies not only enhances firm value but also stimulates local green innovation and reduces regional carbon emissions. This research offers theoretical insights and policy implications for strengthening green finance frameworks and enhancing the environmental responsibility of ClimTECH firms. (shrink)

Green finance plays a crucial bridge as an intermediary between finance and the environment, facilitating resource allocation. The disclosure of environmental information (EID) is vital for promoting sustainable economic development. This study utilizes panel data covering the period from 2012 to 2019, focusing on Chinese companies listed in high-polluting industries. The findings demonstrate that green finance policies have a significant positive impact on EID, while increased managerial power has a detrimental effect. However, green finance policies can (...) mitigate the negative consequences arising from moral hazard and adverse selection resulting from managerial power. They enhance the quality of EID by restricting long-term loan resources for polluting entities. The heterogeneity test reveals that the effectiveness of green finance policies in promoting EID varies across different regions of China. In non-state-owned companies, green finance policies are more effective in constraining managerial power. The moderating effect of green finance on managerial power is weakened by improvements in internal control. Green financing can offset the adverse impact of managerial power on EID when debt levels are high. Our research plays a crucial role in advancing micro-academic studies in the field of green finance. By strengthening internal controls for corporate managers and promoting EID policies, we provide essential support and guidance to decision-makers. (shrink)

Starting from MacIntyre’s virtue ethics, we investigate several codes of conduct of banks to identify the type of virtues that are needed to realize their mission. Based on this analysis, we define three core virtues: honesty, due care, and accuracy. We compare and contrast these codes of conduct with the actual behavior of banks that led to the credit crisis and find that in some cases banks did not behave according to the moral standards they set themselves. However, although banks (...) and the professionals working in them can be blamed for what they did, one should also acknowledge that the institutional context of the free market economy in which they operated made it difficult to live up to the core values lying at the basis of the codes of conduct. Given the neo-liberal free market system, innovative and risky strategies to enhance profits are considered desirable for the sake of shareholder’s interests. A return to the core virtues in the financial sector will therefore only succeed if a renewed sense of responsibility in the sector is supported by institutional changes that allow banks to put their mission into practice. (shrink)

Starting from MacIntyre’s virtue ethics, we investigate several codes of conduct of banks to identify the type of virtues that are needed to realize their mission. Based on this analysis, we define three core virtues: honesty, due care, and accuracy. We compare and contrast these codes of conduct with the actual behavior of banks that led to the credit crisis and find that in some cases banks did not behave according to the moral standards they set themselves. However, although banks (...) and the professionals working in them can be blamed for what they did, one should also acknowledge that the institutional context of the free market economy in which they operated made it difficult to live up to the core values lying at the basis of the codes of conduct. Given the neo-liberal free market system, innovative and risky strategies to enhance profits are considered desirable for the sake of shareholder’s interests. A return to the core virtues in the financial sector will therefore only succeed if a renewed sense of responsibility in the sector is supported by institutional changes that allow banks to put their mission into practice. (shrink)

Public comments criticizing the honesty and trustworthiness of Professionals in Finance (PIFs) are commonly seen as a way to motivate them towards engaging in more socially responsible business practices. However, the link between public views of this professional group, the self-views of individual group members, and their motivation to engage in Corporate Social Responsibility (CSR) activities has not been empirically examined. In this research, we draw on Social Identity Theory (SIT) and the Behavioral Regulation Model for social evaluation (...) (BRM) to examine how the self-views of individual group members relate to perceived characteristics of their professional group, indicating Competence and Morality. In two studies (N = 123, 191) we examined whether the self-views of high-profile and general PIFs are affected by other people's perceptions of the honesty and trustworthiness of this professional group. The results offer support for our reasoning derived from SIT and the BRM. In both studies, we first demonstrate that public concerns about the group's lack of honesty and trustworthiness impact on the moral self-views of financial professionals. Subsequently, we employ an experimental design to reveal that reinforcing moral criticism leveled at the group only reduces the motivation of individual group members to engage in CSR activities, while group-level moral affirmation enhances this motivation. The results of both studies converge to demonstrate how public critique on the moral behavior of their professional group relates to the self-views and behavioral motives of PIFs. We consider the theoretical and practical implications of these findings. (shrink)

Members of the academic community, lawyers, government officials, and professionals in the accounting and financial services industries examine ethical issues ...

This paper contributes to the debate on the role of financial derivatives for capitalism. It responds to Bryan and Rafferty’s defence of their analysis and their critique of my own. The paper argues that their analysis confuses what a financial derivative does, and mixes together different kinds of derivative – and non-derivative – that play very different roles. After detailing these points, the paper discusses the relationship between gold, money and derivatives, rejecting their notion that derivatives are some kind of (...) new ‘commodity money’. An important theme absent from Bryan and Rafferty’s analysis is the relationship of financial trading and derivatives markets to parasitism in the imperialist world economy. To illustrate this, the paper notes advantages enjoyed by the major financial powers – the US and the UK – that are the main centres for the origination of derivatives and for derivatives trading. (shrink)

A global survey of Business Ethics as a field of teaching and research was launched in the second half of 2008. The launch of this survey coincided with the global financial meltdown that was triggered by the subprime crisis in the USA. As part of the global survey of Business Ethics, respondents from nine world regions were requested to provide information on the current focus of research in the field of Business Ethics in their respective countries. They were also asked (...) about the new challenges that they foresee arising over the next 5 years. The timing of the survey makes it possible to determine what the focus of research in the field of Business Ethics was before the start of the global economic crisis, whilst the responses that were given to the survey in response to the question about new challenges in the field of Business Ethics over the next 5 years give an indication of what the new focus areas in Business Ethics research might be after the onset of the global economic crisis. By critically comparing the focus areas of research in Business Ethics prior to the economic crisis to the new areas of research that are foreseen after the onset of the global economic crisis, some insights might be gained on how the global economic crisis is likely to affect the study of capitalism, finance and corporate responsibility in the field of Business Ethics. (shrink)

The urgent need to address climate change poses a range of complex moral and practical concerns, not least because rising to the challenge will require cooperation among countries that differ greatly in their wealth, the extent of their contributions to the problem, and their vulnerability to environmental and economic shocks. This thesis by publication in the field of climate ethics aims to characterise a range of national responsibilities associated with acting on climate change (Part I), and to identify proposals for (...) fulfilling those responsibilities through fair and feasible institutional arrangements (Part II). I aim not only to address substantive gaps in scholarly understanding of those responsibilities, but also to strengthen the ability of climate ethics to engage meaningfully with climate policy. Chapter 2 addresses the question of whether wealthy countries owe a “climate debt” to poor countries. It finds that even if climate debt (suitably interpreted) may provide a coherent and morally plausible concept, its political value as a discursive frame that can provide a basis for cooperation is limited. Chapter 3 investigates the role that equity may play in negotiations on a long-term climate change agreement. It argues that developed and developing countries may reach a “principled bargain” if both converge on a way of differentiating their responsibilities that places less emphasis on a rigid dichotomy between the two groups and more emphasis on objective criteria relating to their contribution to the problem and capacity to address it. Chapter 4 explores a question largely overlooked in climate ethics, namely whether wealthy countries owe compensation to those who are adversely affected by the climate policies which they enact. I find that enacting countries have responsibilities to compensate both domestic and foreign citizens who would suffer disproportionate losses from the effects of policies. Chapter 5 assesses whether wealthy countries may legitimately adopt unilateral (or “fragmented”) rather than multilaterally coordinated approaches to raising climate finance for developing countries. It finds that coordinated target-setting, effort sharing and oversight arrangements are essential, but that a mix of unilateral and coordinated approaches to raising funds will be necessary for securing legitimacy. In Chapter 6, through addressing the broader question of what should count as official aid, I consider whether wealthy countries may draw on aid budgets to support developing countries’ efforts to address climate change. I find that the current definition of official aid should be retained but supplemented by specified exclusions from eligibility in order to preserve the aid regime’s integrity. Nevertheless, some climate finance may justifiably be counted as aid provided that concerns relating to the diversion of aid funding are addressed. In addressing these research questions, the thesis seeks not only to make original theoretical contributions to climate ethics but also to strengthen broader scholarly understanding of the ways in which ethics and international public policy may inform one another, particularly by highlighting the role of framing considerations (Chapter 2), feasibility considerations (Chapter 3), and the ways in which principles of fairness and legitimacy map onto institutional functions (Chapters 4, 5 and 6). (shrink)

There has recently been much debate about the idea of levying a tax on particular transactions on international financial markets. Economists have argued about how much revenue such an international financial transaction tax would raise and they disagree about what effects it would have on trade volumes, financial stability, and overall growth. Politicians have argued about the feasibility of introducing such a tax internationally and they disagree on its adequacy as a policy response to the current financial and economic crisis. (...) This article contributes to the debate about international financial transaction taxation by bringing the perspective of political philosophy to bear on the politicians’ and economists’ arguments about policy. I shall outline a framework for thinking about justice in finance, and defend the idea of an international financial transaction tax as an instrument for making the international financial system more just. (shrink)

This article analyzes the Turkish central bank's “managed uncertainty” policy after the global financial crisis. During 2010–14, the central bank intentionally generated uncertainty around short-term interest rates, using the level of predictability faced by financiers as a tool to buffer the domestic economy from volatile capital flows. How did the central bank implement this unconventional policy? Building on interview data and public texts, the article argues that the surge in capital inflows after the crisis sourced a debt-led, financialized economic growth (...) model and deepened Turkey's reliance on external financing. The central bank could diverge from the financial sector's policy preferences despite Turkey's increased foreign capital dependence because the availability of low-cost, ample, private funding opportunities temporarily expanded policymakers’ room to maneuver. However, operating vis-à-vis an unsustainable growth regime, the central bank had to revert to orthodoxy in 2014 due to declining investor confidence and capital flight. This article contributes to the literature on the structural power of finance by demonstrating how finance derives its structural power from funding financialized growth, not productive investments. It also shows that financial structural power varies based on the source and cost of external financing beyond the degree of foreign capital dependence. (shrink)

This study discusses how social movements can influence economic systems. Employing a political-cultural approach to markets, it purports that 'compromise movements' can help change existing institutions by proposing new ones. This study argues in favor of the role of social movements in reforming economic institutions. More precisely, Socially Responsible Investment (SRI) movements can help bring SRI concerns into financial institutions. A study of how the French SRI movement has been able to change entrenched institutional logics of the French asset (...) management sector provides wide-ranging support for these arguments. Empirical findings are drawn from a longitudinal case study (1997-2009), based on participative observation, interviews and documentary evidence. Implications for research on social movements, institutional change and SRI are outlined. Lastly, the study provides practitioners with some theoretical keys to understand the pros and cons of 'SRI labels'. (shrink)

Goal – The aim of the article is to identify dysfunctional phenomena (implementation of specific mechanisms/solutions and actions taken), generating increased opacity and limit the responsibility/accountability of public finance in Poland, exacerbated by the COVID-19 crisis. Methods – descriptive analysis, comparative analysis and financial analysis methods were used. Results – fiscal transparency and accountability in Poland is limited by: the marginalisation of the role of the state budget, the loosening of the stabilising expenditure rule, the creation of financial mechanisms (...) based on special funds fed by repayable financing sources for the implementation of state tasks, inter alia, in the fight against the effects of the COVID-19 crisis, the use of national and EU methodologies for calculating the deficit and debt of the public sector in order to conceal part of them, the lack of a consolidated financial statement of the public finance sector. (shrink)

When many people are involved in an activity, it is often difficult, if not impossible, to pinpoint who is morally responsible for what, a phenomenon known as the ‘problem of many hands.’ This term is increasingly used to describe problems with attributing individual responsibility in collective settings in such diverse areas as public administration, corporate management, law and regulation, technological development and innovation, healthcare, and finance. This volume provides an in-depth philosophical analysis of this problem, examining the notion (...) of moral responsibility and distinguishing between different normative meanings of responsibility, both backward-looking and forward-looking. Drawing on the relevant philosophical literature, the authors develop a coherent conceptualization of the problem of many hands, taking into account the relationship, and possible tension, between individual and collective responsibility. This systematic inquiry into the problem of many hands pertains to discussions about moral responsibility in a variety of applied settings. (shrink)

In contrast to the recent rise to economic importance of offshore finance centres (OFCs), the topic of taxation has so far created little interest among scholars of corporate social responsibility (CSR). This paper makes two contributions to addressing this lacuna. Applying a range of influential normative theories of ethics, it first offers an ethical evaluation of tax havens. Second, the paper examines what use large firms that are headquartered in two OFCs—Bermuda and the Cayman Islands—make of formal CSR tools. (...) The emerging duplicity in tax havenbased companies professing social responsibility highlights once more the political nature of CSR, where at least some firms and/or industries can successfully limit government power to enact regulation as well as shape the discourse around CSR. The study of CSR in OFC-based firms thus calls into question the usefulness of the often quoted definition of CSR as going beyond the law. (shrink)

We investigate the financing strategies of environmentally responsible firms to understand how they set target capital structures and make incremental financing decisions. Literature shows that firms with better environmental performance have lower risk and better access to financing. However, it is not obvious how these firms choose to finance their investments. Using an extensive data set of U.S. firms, we find that firms with superior environmental performance have significantly lower debt ratios and use mostly short‐term debt for temporary (...) financing needs. In doing so, environmentally responsible firms are able to achieve more tax savings and experience lower costs of financial distress. Our results provide new empirical facts about environmental performance and financing decisions, and they help explain the observed relationship between environmental performance and economic performance. (shrink)

This primarily diagnostic paper offers, from the perspective of relational egalitarianism, a normative analysis of three major injustices in the context of adaptation finance. Adaptation finance includes payments provided by the affluent countries of the Global North to low-income countries in the Global South, countries particularly exposed to the harms of climate change. Relational egalitarianism is the normative view that interactions between people and between institutions have to respect the equal moral status of every human being. The first (...) injustice, from this perspective, consists in the sheer fact that adaptation measures are required at all to deflect harm from people who did not significantly contribute to the causes of climate change. The second injustice consists in the persisting, even increasing adaptation finance gap, as countries of the Global North do neither provide adequate financial means to reduce climate risks, nor even fulfil their commitments to adaptation finance pledged in the Copenhagen Accord in 2009. The third injustice emerges from current procedures to determine criteria for distributing scarce financial resources that consolidate structural injustice. The paper concludes by providing the contours of a practical response to these injustices that respects the demands of relational egalitarianism. (shrink)

Securitization is considered to be one of the biggest financial innovations of the last century. It is also regarded as both a catalyst and a solution to the 2008 financial crisis. Once a popular method of financing the mortgage and consumer credit markets, aspects of the global securitization market are now struggling to revive. In this paper, I discuss the role that ethics played in securitization prior to the 2008 financial crisis and find that it is not an obvious story (...) of moral failures, but rather that it lies in more subtle elements of the financial system. The ethics uncertainty role in the securitization story is one of flawed incentives and the shifting of responsibility for handling risk. The role of securitization and the ethics of risk transfer have rarely been discussed explicitly in the literature. The historical origins of securitization and lessons learned from previous flawed uses of the process are also provided. I also detail the various global institutional reform proposals that have taken place. Moving forward, it is crucial to understand the causes, consequences, and ethical implications of securitization in the financial crisis so as to help individuals and managers better assess risk, align incentives, and design appropriate policy responses. (shrink)

This research advances our understanding of the manifestation of tensions and ethical issues in entrepreneurial finance. In doing so, we offer an overview of ethics in entrepreneurship and finance, delineating the curious paucity of research at their intersection. Using twelve vignettes, we put forward the asymmetries between entrepreneurs and investors and discuss a set of ethical problems that arise among key actors centring on the dynamics of venture partner entry and exit, applying the multiple-lens ethical perspective to analyse (...) these issues. This analysis culminates in the introduction of a general classification scheme for ethical problems across venture partners. Our analysis highlights the moral dimension inherent in the entry and exit of venture partners and the importance of considering moral judgement, as well as intention in future analysis of any decision-making. Our study also points to the moral responsibility in finance, especially to the mutual moral responsibilities of investors and entrepreneurs. By integrating ethics into finance, this research also demonstrates that in the case of venture partner exit, an ethical approach and decent governance go beyond compliance to the law. We conclude with implications for practitioners, specifically with some proposals for a solution to the problem of blocked and forced exit. Together, we make several contributions to the literature by integrating ethics, finance and entrepreneurship, and we call for future research to stimulate a growing body of research within this presently overlooked area. (shrink)

Socially responsible investment in France is based on a “best in class” approach as opposed to the “exclusion” approaches used in other countries such as the United States or United Kingdom, where the rejection of sin stocks has been dominant historically. The objective of this research note is to examine whether the French SRI market, by focusing more on financial rather than on ethical considerations, compared with other countries such as the United States, the United Kingdom, or even Sweden, (...) may lead to a form of “mainstreaming” of SRI processes. The authors explore several convergent mechanisms. First, the authors analyze the importance of the mainstreaming issue in the history of SRI as well as in the contemporaneous debate in the academic literature on the links between financial and extrafinancial performance. Second, the authors review the role played by ethical finance laws adopted in France in the early 2000s in the development of the SRI market. Finally, the authors discuss the results of a survey of French SRI analysts working both for large institutional investors and asset managers in France in 2009. (shrink)

All of finance is now automated, most notably high frequency trading. This paper examines the ethical implications of this fact. As automation is an interdisciplinary endeavor, we argue that the interfaces between the respective disciplines can lead to conflicting ethical perspectives; we also argue that existing disciplinary standards do not pay enough attention to the ethical problems automation generates. Conflicting perspectives undermine the protection those who rely on trading should have. Ethics in finance can be expanded to include (...) organizational and industry-wide responsibilities to external market participants and society. As a starting point, quality management techniques can provide a foundation for a new cross-disciplinary ethical standard in the age of automation. (shrink)

All of finance is now automated, most notably high frequency trading. This paper examines the ethical implications of this fact. As automation is an interdisciplinary endeavor, we argue that the interfaces between the respective disciplines can lead to conflicting ethical perspectives; we also argue that existing disciplinary standards do not pay enough attention to the ethical problems automation generates. Conflicting perspectives undermine the protection those who rely on trading should have. Ethics in finance can be expanded to include (...) organizational and industry-wide responsibilities to external market participants and society. As a starting point, quality management techniques can provide a foundation for a new cross-disciplinary ethical standard in the age of automation. (shrink)

This book review critically analyzes Mark Coecelbergh’s newest work: “Money Machines”. In his book, Coeckelbergh discusses the epistemic, social and moral distances that are created by modern financial technologies. It consists of a historical analysis of financial technologies from cowrie shells to digital money, a theoretical analysis of the distancing effects of financial technologies which revolves around the theories of Simmel and McLuhan and a discussion of the empirical instances of modern money machines within the framework of distancing. Two problems (...) and one missed opportunity of the book are discussed in this review: the underdeveloped nature of the theory of distancing which leaves the reader with multiple open questions, the absence of established theories of money and the sometimes uncritical comparison of different theories applied to analyse financial technologies. Nevertheless, the book convincingly manages to open up a novel branch of research in the field philosophy and ethics of technology. Its highly original discussion of financial technologies and embracement of Simmel as a philosopher of technology provide for interesting prospects for future work. (shrink)

Following the financial crisis and recent recession, the center of gravity of global economic growth and competitiveness is shifting toward emerging economies. As a leading and increasingly influential emerging economy, China is currently attracting the attention of academics, practitioners, and policy makers. There has been an increase in research interest in and publications on issues relating to China within high-quality international academic journals. We therefore organized a special issue conference in conjunction with the Journal of Business Ethics in Lhasa, Tibet, (...) on May 19–20, 2014, on Business Ethics in Greater China: Past, Present and Future. The papers for the special issue focused on the intersection of ethics and finance, and fit within one of the three themes: environment and sustainability, corporate social responsibility, and fraud. Within these themes, issues of intellectual capital protection, gender equality, political connections, regional development, investor protection, corporate stewardship, trust and corruption, and corporate transparency each play a significant role. In this paper, we survey these studies and the related literature to provide a comprehensive coverage of business ethics and finance issues that affect China. (shrink)

The human resources profession emphasizes the personal and interpersonal aspects of work, that make it conscious of complex ethical issues in relationships in the workplace, while finance specialists are conversant with routine compliance with regulations. Marketing professionals are under pressure to produce revenue results. Thus, this research hypothesized that human resources managers would be more disapproving of unethical conduct than both finance and marketing functional managers, and that finance managers would be more disapproving than marketing managers. When (...) asked to evaluate instances of unethical behavior in vignettes, human resources and finance managers were both significantly more disapproving than marketing managers. However, human resources managers were not significantly more disapproving than finance managers. Explanations for the results lie in the divergent antecedent conditions, objectives, perceptions of ethical problems and demands of the various functions. Alternative behavior patterns to resolve ethical dilemmas and expected consequences by the different functions also define their ethical orientations. Average responses on the disapproving side from all three functional groups are explained by two complementary trends that promote ethical awareness among all functional managers. One is the adoption of homogeneous conventions in ethical business practice. The other trend is the increase in ethical awareness specific to each of the functional professions. (shrink)

In Mexico, the management of public resources has been questioned by the State, and mainly the results that the public administration at its three levels (federal, state and municipal), by the lack of transparency in the application and verification of public resources. The experience that gives us the operation of different emerging programs that focused on reducing social and economic inequality in the country, we can locate them as the first attempts in the search for a solution that is complex. (...) Moving from the role of the benefactor and welfare state to the promoter of the regions and in the recognition of the focalization of priority attention areas, the path that has been taken is not only the beginning. Recognizing the public nature of public finances as a promoter of social development, we must understand it as the one assumed by the State through social, political and economic co-responsibility to solve poverty and marginalization of its own public policy orientation and vision of solution has been made since the eighties. From the above, we can point out some preliminary conclusions including the study of the indigenous language-speaking population with a high level of social exclusion in the methodology for the definition of multidimensional poverty in Mexico, will allow the allocation of public resources in the fight against poverty to be effective since it will make it possible to identify to the target population that is subject to social exclusion and marginalization. This invites us to a final reflection: What to do to address the just social demands of the indigenous population that is immersed in poverty, marginalization and exclusion? What to do so that they do not leave their communities, and if they have already done so, how to attend to the needs of family groups that are due to the expense of a remittance that may never arrive? (shrink)

A critical issue for the future growth and impact of socially responsible investment (SRI) is whether institutional investors are legally permitted to engage in it – in particular whether it is compatible with the fiduciary duties of trustees. An ambitious report from the United Nations Environment Programme’s Finance Initiative (UNEP FI), commonly referred to as the ‘Freshfields report’, has recently given rise to considerable optimism on this issue among proponents of SRI. The present article puts the arguments of (...) the Freshfields report into some further both empirical and critical perspective, however, and suggests that its findings do not call for very much optimism. The general argument is that while the understanding of fiduciary duty outlined by the Freshfields report seems to allow institutional investors to at least sometimes take some social or environmental considerations into account, the support it gives for SRI is notably contingent and, furthermore, it rules out exactly the kind of SRI which proponents of social responsibility and environmental sustainability should hold in highest regard – proactive cases and socially effective investment strategies. If SRI is to become an important force for corporate social responsibility through its adoption by institutional investors, then, it is suggested that legal reform is needed. (shrink)

The motivation of the study is to gauge the effects of access to finance, technical know-how, and financial literacy on women’s empowerment through establishing women’s entrepreneurial development. A sample of 950 women-owned SMEs was considered, and structured questionnaires were sent from getting target responses. After careful assessment through the data cleansing procedure, it was found that only 795 responses are suitable for further investigation, implying the sample response rate for the study is 74.71%. The study implemented structural equation modeling (...) and multivariate regression analysis for gauging the causal association that is direct and indirect effects of target variables. According to findings, a positive statistically significant linkage was revealed with women’s entrepreneurship sustainability and women empowerment. Furthermore, the mediating effects were also established for women’s empowerment. According to the study findings, it is suggested that for women entrepreneurship sustainability, effective policies surrounding financing accessibility, technical knowledge expansion, and financial understating have to be promulgated in the economy, which allows bringing women empowerment at large. (shrink)

A philosophical account of risk, such as this book provides, states what risk is, which attitudes to it are rational, and which acts affecting risks are rational. Attention to the nature of risk reveals two types of risk, first, a chance of a bad event, and, second, an act’s risk in the sense of the volatility of its possible outcomes. The distinction is normatively significant because different general principles of rationality govern attitudes to these two types of risk. Rationality strictly (...) regulates attitudes to the chance of a bad event and is more permissive about attitudes to an act’s risk. Principles of rationality governing attitudes to risk also justify evaluating an act according to its expected utility given that the act’s risk, if any, belongs to every possible outcome of the act. For a rational ideal agent, the expected utilities of the acts available in a decision problem explain the agent’s preferences among the acts. Maximizing expected utility is just following preferences among the acts. This view takes an act’s expected utility, not just as a feature of a representation of preferences among acts, but also as a factor in the explanation of preferences among acts. The view extends to evaluations of combination of acts, either simultaneous or in a sequence. It takes account of an agent’s attitudes to an act’s risk without weakening the standard of expected-utility maximization. The book’s theory of risk also grounds a justification of the risk-return evaluation of investments that finance advances, and a generalized version of this type of evaluation that a professional may use to advise clients about risks and that a government regulatory agency may use to make decisions about risks on behalf of the public. (shrink)

With the rapid development of China's economy in recent decades, and the decentralization of the country's economic regulation and legal support, private financing has developed rapidly due to its simple, flexible and unique advantages. Some SMEs can solve it to some extent through private financing. The company's own financing issues have also helped the local financial market's effectiveness. Based on the “Yantai Private Financing Interest Rate Index,” this paper constructs a private financial risk index model from three perspectives of interest (...) rate risk, scale risk and credit risk, and conducts a case simulation analysis of the private financing risk index. The characteristic indicators of the early warning system are screened from the macro, micro and stability dimensions, and subjective and objective adjustment coefficients are set for each indicator from both subjective and objective perspectives. This article takes the Yantai Index as the representative of China's private financing interest rate index. Based on the term structure of Yantai's private lending rate, this paper studies its response to macroeconomic shocks and analyzes the information value it contains. And use the private financing interest rate index to build a financial risk monitoring model. Through the system transformation model, the article finds that there is a significant asymmetry in the response of private lending to macroeconomic shocks. When private lending rates are higher, inflation has a greater effect on interest rates; when private lending rates are lower, monetary policy has a stronger regulatory effect on private lending rates. In the data processing, the principal component analysis method and the Bayesian vector autoregressive model were established. Through the study of this article, it is concluded that the interest rate decreases with the increase of the term, and the risk comparison is performed for the 1-month period, 3-month period, June period, 1-year period, and more than 1-year. The risks in the previous period are greater, and the risks in the March and June periods are relatively small. This model can be used to calculate the comprehensive evaluation value and its fluctuation in the historical risk market and historical equilibrium market, so as to determine the risk range of the comprehensive evaluation value. Thus, the early warning system is verified to be feasible. (shrink)

I examine the role that mathematics plays in understanding and modelling finance, especially stock markets, and how philosophy affects it. To this end, I explore how mathematics penetrates finance via physics, constructing a ‘financial physics’, and I outline the philosophical backgrounds of this process, in particular the ‘philosophy of equilibrium’ and that of critical points or ‘out-of-equilibrium’. I discuss the main characteristics and a few weaknesses of these mathematizations of financial systems, notably econometrics and econophysics, and I compare (...) the two ways, top-down and bottom-up, of building mathematical approaches to finance. The top-down approach is the most used and the most conservative. I argue that it guarantees a mathematical account, but it is less effective than the more difficult bottom-up approach, which is more appropriate and which may end up without a mathematical account of financial phenomena. I then consider two important issues raised by a mathematical approach to finance, that is, the performative and the reversing side of mathematics, and an ethics of mathematics. In the first case I argue that mathematics not only can be a performative device, but it also enables ‘reversing’ dynamics, that is, a mathematical model may become not a representational tool, but a device of social engineering—a mathematical way of investigating what are the initial conditions and processes needed to obtain an intended result. In the second case I argue that this specific relation between mathematical modelling and prediction raises an ethical question in finance, namely, a responsible construction and use of the mathematical models provided by a financial physics. (shrink)

Whether corporate strategic Environmental, Social, and Governance (ESG) disclosure can be effectively screened by external markets still needs more empirical support. Despite numerous studies confirming the positive impact of ESG, the issue of strategic ESG disclosure has yet to receive sufficient attention. This study examines the impact of ESG greenwashing on the cost of debt financing and stock returns using panel data of Chinese A-share listed corporates from 2012 to 2021. The study finds that external markets fail to recognize ESG (...) greenwashing in the short term, leading to a temporary reduction in the cost of debt financing and an increase in stock returns, but these effects are not lasting. Mechanism analysis shows that ESG greenwashing enhances corporate reputation and reduces the cost of debt financing through the reputation effect, stimulates investor sentiment, and improves stock returns through the sentiment effect. The study identifies management myopia, excessive power, financial distress, and information asymmetry as the main drivers. However, strong oversight by independent directors, involvement of Big Four audit firms, investor site visits, and high industry competition can mitigate these misleading effects. This research expands the understanding of the causes and economic consequences of corporate ESG greenwashing and provides empirical evidence for managing this phenomenon. (shrink)