By Mobolaji Hakeem Ishola
Abstract
The recent global financial crisis has once again lent credence to the financial instability hypothesis which argues that financial market in the world is inherently unstable. This instability is however worsened by heedless ethical standard in the industry. A salient feature of the financial sector is its contagious effect, thus a persistent crisis in the sector generates negative externalities within and across national boundaries. The dimension, magnitude and impact of the crisis have left no economy immune from its shock. This paper analyses the role of ethics in financial industry. The paper argues that ethical and profitability concerns are not mutually exclusive business objectives, and that both should be pursued rigorously and simultaneously. To avert future crisis, the financial sector industry has to show greater concern for ethics and market discipline. It concludes that while the Islamic banks could learn more about product design and innovation from the conventional banks, the latter should learn more about ethical concerns from the Islamic Banks.
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