Do you believe that most individuals who are active in the financial markets operate ethically or unethically? Explain your answer thoroughly.

 

The public seems to perceive that the financial services sector is more unethical than other areas of business. This misperception persists for several reasons. First, the industry itself is quite large. It encompasses banks, securities firms, insurance companies, mutual fund organizations, investment banks, pensions funds, mortgage lenders—any company doing business in the financial arena. Because of its vast size, the industry tends to garner many headlines, many of which tout its ethical lapses.

The industry is also highly regulated, so a higher percentage of these bad transactions is likely identified and reported, perhaps more so than in other less regulated industries.

Step-by-step explanation

A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials, and precious metals known in the financial markets as commodities.

Unethical issues in financial markets occur for the following reasons.

1. Self-interest sometimes morphs into greed and selfishness, which is unchecked self-interest at the expense of someone else. This greed becomes a kind of accumulation fever. Suppose you accumulate for the sake of accumulation. In that case, accumulation becomes the end, and if accumulation is the end, there is no place to stop—the focus shifts from the long-term to the short-term, with a big emphasis on profit maximization.
2. Some people suffer from stunted moral development: It happens in three areas: the failure to be taught, the failure to look beyond one's perspective, and the lack of proper mentoring.